Research On The Application And Influence Of Performance Commitment In M&A

With the continuous development of China's capital market and the continuous improvement of policy mechanisms,corporate mergers and acquisitions activities are becoming more and more normal.M&A activity is extremely risky,and it is easy to cause unsatisfactory mergers and acquisitions or even mergers and acquisitions.The performance commitment is to avoid the high premium risk of M&A transactions and protect the interests of investors.However,along with the successive disclosures of the listed company's annual report,the promised performance did not meet the standards,causing chaos in various markets,and even led to judicial disputes between the two parties.The performance commitments led to frequent derivative risks,which laid a huge hidden danger for the integration work after the merger.Therefore,it is of theoretical and practical significance to study and analyze how companies use performance commitments and evade their adverse effects and risks.The article first introduces the background,significance and framework of the research.Secondly,through the review of the concept,theory and literature of performance commitment,it introduces the meaning and application mechanism of performance commitment.Thirdly,the analysis of the acquisition of the SUN SHINE by Royal Group combine relevant theory to analyze the characteristics ofperformance commitments in the case,find out its inadequacies,analyze the performance commitment process,the unfavorable impact of performance commitments through the case study method,and use financial indicators to analyze the performance commitments that are not up to standard.The specific reasons are to use the hierarchical holographic model method to identify the unique risks brought about by the performance commitments in the M&A.Finally,from the performance commitment setting and implementation stage,the problems and causes in the performance commitment are analyzed separately.The article finds that the performance commitment is reversed in the M&A,the performance compensation lacks a strong guarantee mechanism and even some provisions are in the setting stage.There are loopholes that pose a huge risk to the business.The article combines case analysis to further propose countermeasures and optimization suggestions for promoting M&A of listed companies and rational use of performance commitments:performance commitments should be set with caution and caution,not only must we agree on the depreciation of goodwill,but also the relevant measures to guarantee the performance compensation,and the appropriate choice of payment methods to improve the enthusiasm of the management.For the pledge of shares during the lock-up period,clear requirements can be made,and the integration of mergers andacquisitions should be emphasized to make the performance commitments work properly.As a tool for redistribution of M&A risk,performance commitment needs to be taken seriously by both parties,so that the efficiency of M&A integration is continuously improved,thereby increasing corporate value.