Research On Mergers And Acquisitions Performance Commitment And Protection Effect Of Mergers And Acquisitioners' Interests And Improvement

With the rapid development of M&A market,the risk of M&A has become more and more obvious.At this time,performance commitment came into being as a valuation adjustment mechanism.The Securities Regulatory Commission stipulated that the major shareholders of the acquired party should promise the future performance of the subject matter.Since then,performance commitment of M&A has gradually become the "standard configuration" of M&A reorganization,and has been applied more and more widely.However,with the development of performance commitment,its problems have become increasingly prominent.For example,in order to achieve M&A transactions,high performance commitment is used as a means to enhance valuation to send the market a good signal of future development of the M&A enterprises,resulting in "double-high" phenomenon.And when the follow-up performance commitments fail to meet the standards,the negative impact on the market and the apologies and legal disputes caused by the various acts of the subscribers will infringe the interests of the merger and acquisition parties to a certain extent.Based on the current situation that performance commitment is widely used in M&A market,but the rate of failure to meet the standards is high and rising,this paper expects to study the protection mechanism and effect of performance commitment on M&A parties through typical case studies.It is expected to find out how to make better use of performance commitment to protect the interests of mergers and acquisitions,and put forward relevant suggestions for different subjects.Firstly,this paper combs the motivation of M&A reorganization,the causes of risk,risk prevention measures and other aspects,as well as the connotation,role and risk of performance commitment.The research found that most of the scholars focused on the research of performance commitment and M&A risk and the reasons why performance commitment did not meet the target.However,there were few studies on the protection mechanism of performance commitment in M&A,and even less on the protection effect of performance commitment on the interests of M&A parties.Secondly,based on the data of China's M&A and restructuring market from 2012 to 2017,this paper makes descriptive statistics and analysis on the characteristics of M&A status quo,the scale of performance commitment,the status quo and trend of implementation.After statistical analysis,the scale of M&A reorganization,the scale of performance commitment and the proportion of performance commitment not meeting the standards are all on the rise.Then it summarizes the relevant theories and uses the information asymmetry theory as a theoretical tool for case analysis.After that,this paper analyses the case of Xinhua Medical Merger and Acquisition of Yuanyue Pharmaceutical Machine.Firstly,it introduces the main content of performance commitment and performance of the merger and acquisition parties,the process of merger and acquisition.Secondly,based on the perspective of information asymmetry,this paper analyses the protection mechanism of performance commitment to mergers and acquisitions in the case.Secondly,it explores the effect of protection from the changes of financial performance,valuation and stock price,excess return and cumulative excess return in the three periods of performance commitment.Finally,according to the conclusion,this paper puts forward relevant suggestions for the subjects involved,expecting that the performance commitment mechanism of M&A will play a better role in protecting the interests of M&A parties in the future.This paper argues that it is necessary to sign performance commitment in the process of acquisition of Yuanyue Pharmaceutical Machine by Xinhua Medical Company due to the existence of information asymmetry.Performance commitment can play a protective role by alleviating information asymmetry,adjusting valuation and encouraging the acquired party.However,through the analysis of financial performance,valuation and market value,it is found that performance commitment can promote the improvement of the company's operating conditions and market value in the short term.However,in the late stage of performance commitment failure and performance commitment compensation fulfillment,the company's operating conditions and market value have been severely negatively impacted.In the long term,performance commitment is difficult to protect the interests of mergers and acquisitions.This paper holds that in order to better play the protective effect of performance commitment and promote the better development of M&A market,we should start from the three main bodies of supervision,M&A party and M&A party at the same time.For the supervisors,the main task is to improve the system,strengthen the supervision of merger and acquisition transactions and performance commitments,and protect the merger and acquisition parties from the outside.For the mergers and acquisitions,it is mainly to enhance internal governance and supervision,set up performance commitment terms rationally,and conduct mergers and acquisitions prudently to protect themselves from the inside.For the acquired party,it is mainly to enhance the sense of responsibility,truly reflect the quality of assets,and fulfill performance commitments in accordance with the provisions of the agreement to protect the acquired party.