Research On The Design Of Performance Commitment Of X Company Mergered Y Company

With the development of China's economy,M&A transactions have become an important means for contemporary companies to achieve efficient resource allocation and enhance competitiveness.In the past few years,there have been more and more premium mergers and acquisitions.In order to reasonably control the risks brought by high-value mergers and acquisitions,the performance commitment compensation system has been widely used.According to statistics,in the major asset restructuring case reviewed by the China Securities Regulatory Commission in 2015,86.44%of the enterprises signed performance compensation agreements.In performance commitment as a price adjustment mechanism,its original intention is to reduce the high valuation bubble,but the performance commitment also brings new risks while controlling the risk of mergers and acquisitions.In practice,performance commitments often become overestimated.The "support" behind the value and high premium mergers and acquisitions.The performance commitment party can not achieve high performance commitments,bear huge compensation,listed companies due to performance commitments are not up to the standard and the large amount of goodwill impairment,resulting in the "two loses"end.On the other hand,the terms reached by the M&A and reorganization exchanges should have been the result of the interests of both parties,but the application of the performance commitment process has evolved into a "unilateral protection agreement" due to the setting of some special provisions,which has damaged The balance of interests of multiple parties in the transaction brings equity disputes.Therefore,how to optimize the design of performance commitment agreement and reduce the shortcomings of performance commitment itself becomes a problem worth studying.This article takes X company to acquire Y company as an example,and studies the content of the relevant clauses of the performance commitment compensation agreement of its design.Using the event analysis method and financial indicators to analyze the long-term and short-term effects of the performance commitment compensation agreement on the M&A performance,it is found that X company is When the announcement of the reorganization of the transaction progress was announced to the market a few days ago,the excess return rate rose rapidly,indicating that the performance commitment had a short-term stimulating effect.However,the excess return rate fell rapidly in the days after the announcement.In the period when the performance was not met,the market received negative news,the excess return rate obtained by investors continued to be negative,and the cumulative excess return rate continued to decline.Moreover,the degree of negative reaction of investors to the news has become more and more intense as the number of performance failures has increased.Based on the information asymmetry theory,option pricing theory and game theory,this paper analyzes the worthy reference and existing problems of the performance commitment compensation agreement,and proposes how to improve the performance of the acquirer,the acquiree and the capital market.