Research On The Motivation And Economic Consequences Of M&A With High Valuation And High Performance Commitment

At present,China is in a new period of economic transformation and upgrading,and mergers and acquisitions of listed companies occur more and more frequently.Performance commitment has been more widely used because of its important role in reducing the risk of M & An and safeguarding the interests of shareholders.Through the analysis of the current situation of M & A transactions in China's securities market,it is found that when M & An occurs,the valuation of the underlying assets is too high and the performance commitment made by the target enterprises is too high.In M & A transactions,high performance commitment can not only push the valuation of high-bid assets,but also enhance the confidence of M & A parties and promote the realization of M & A transactions.However,high performance commitment is often difficult to achieve after mergers and acquisitions.Once the target enterprise's high performance commitment can not be fulfilled,the increasing number of uncompleted high performance commitment will lead to negative economic consequences such as large impairment of goodwill,decline of corporate profitability,damage to the interests of small and medium stockholders and so on.In serious cases,it will increase the risk of bankruptcy.Based on this,this paper takes the characteristic of "double high"(high valuation and high performance commitment)of M & A transaction as the starting point,combined with the application status of high valuation and high performance commitment M & A,the background,definition and main content of performance commitment,combs the domestic and foreign literatures,selects the typical case of "double high" M & A,and studies the motivation and economic consequences of "double high" M & A.First of all,it combs the M & A process,M & A valuation and performance commitment of Qinshang Company's merger and acquisition of Longwen Education.Next,it analyzes the motivation of "double high" M & A from the point of view of the acquirer and the acquired party.Then,taking the current period of M & A,the period of performance commitment and the time of expiration of performance commitment as the axis,this paper studies and analyzes the economic consequences of the merger and acquisition of Longwen Education from different angles,such as short-term market performance analysis,financial index performance analysis,performance evaluation based on EVA and so on.The study found that the failure to fulfill the high-performance commitment of Longwen Education for three consecutive years has brought five economic consequences to the Qinshang company.First,the huge impairment of goodwill directly results in the net profit loss of the Qinshang company in 2016 and 2018,which seriously affects the performance level of the company.Second,the good market performance in the initial stage of M & An is not sustainable.When performance promises cannot be fulfilled,investors lose confidence,share prices fall sharply,and the market reaction tends to be negative.Third,business performance has declined.Operating ability,profitability,short-term solvency and growth ability have all declined significantly.Fourth,the financial situation is worrying,and the risk of bankruptcy and stock pledge is serious.Fifth,the ability of enterprise value creation is reduced,and the efficiency of capital value creation is also greatly reduced.This paper studies the motivation and economic consequences of the common phenomenon of high valuation and high performance commitment M & A("double-high" M & A)in the M & A market,which is helpful to enrich the relevant literature in the field of performance commitment research and provide a new perspective for the study of performance commitment.In addition,through theoretical analysis and case analysis,the conclusions of the study and countermeasures and suggestions for all parties concerned are drawn,which has a certain warning significance for other listed companies with high valuation and high performance commitment mergers and acquisitions.It also has certain reference significance to optimize the environment for the use of performance commitments and establish a better and orderly M & A market.