Study On The Financial Impact Of Performance Compensation Agreement On Jinli Technology's Merger And Acquisition Of Yuhan Optoelectronics

With the unprecedented development of economic globalization and informationization,merger and acquisition transaction shows its indispensable position.On the one hand,it helps the development and growth of enterprises,on the other hand,it provides new impetus for the acquired parties.As far as the merger and acquisition party itself is concerned,the understanding of the merged party is far less than that of the enterprise's own managers.In order to solve the investment errors caused by information asymmetry,mergers and acquisitionees often sign performance compensation agreements to avoid the risks of both sides and protect the interests of shareholders.The performance compensation agreement involved here is implemented by means of agreement signing.It is widely used in M&A operations.It can not only protect the rights and interests of both parties,but also play a role in risk control of M&A itself.In addition to the advantages,the implementation of performance compensation agreements is often accompanied by some negative effects.Based on the analysis of specific cases,this paper discusses a case of Jinli Science and Technology Merger and Acquisition of Yuhan Optoelectronics,studies the financial impact of performance compensation agreement on mergers and acquisitions,and also analyzes the consequences of the failure of performance compensation operation,including disputes between stakeholders,rights damage and so on.Firstly,this paper summarizes the relevant literatures of domestic and foreign scholars on mergers and acquisitions,reorganization and performance compensation agreement.Then,using event study method and accounting index method,it analyses the financial changes before and after mergers and acquisitions of enterprises,so as to deeply analyze the rationality of the case in signing performance compensation agreement.Then we find the following problems: excessive premium of M&A valuation,blindly setting performance targets,single payment method,lagging of preparation for impairment of goodwill,and lack of performance compensation safeguards.Through the above analysis,this paper gives corresponding suggestions on the failure of Jinli Science and Technology Merger and Acquisition of Yuhan Optoelectronics: 1.Reasonable evaluation of enterprise value,comprehensive consideration of the whole process of merger and acquisition,broadening the information channels of merger and acquisition;2.Comprehensive analysis and formulation of performance objectives;3.Comprehensive use of payment methods of merger and acquisition,prudent design of capital costs and payment instruments of merger and acquisition financing;4.Improvement of goodwill measurement Ways to adopt sequential M&A;5.Watch out for loopholes in performance compensation agreements.Through the discussion of the suggestions,I hope to provide some reference for future mergers and acquisitions.Including how to reasonably formulate performance compensation agreement,and to ensure its smooth implementation,we need to pay more attention to the issues,so as to improve the merger and acquisition process,this paper gives relevant suggestions,the ultimate goal is to maximize the protection and meet the rights and requirements of shareholders.