Research On The Risk And Economic Consequence Of M&A Under Performance Compensation Commitment

In recent years,m&a activities among Chinese enterprises have become active,but not every m&a activity can meet the expectations set by both sides.In these failed cases,some mergers and acquisitions did not make a reasonable strategic positioning of the enterprise itself before the merger and acquisition,some mergers and acquisitions on the target of both sides of the valuation standards can not be unified,and even some listed companies after the merger and acquisition,the performance of the decline.In order to balance the premium rate and stimulate the management of the merged party,the CSRC issued the performance compensation agreement policy in 2008,requiring the two parties to sign a performance compensation agreement.Although the CSRC no longer forced the two parties to sign the agreement,but the performance compensation agreement has become the choice of market mergers and acquisitions,most enterprises will still retain this link in the merger and acquisition activities,on the one hand,to control the excessive premium,on the other hand,to protect the role of minority shareholders.Practice has proved that the signing of performance compensation agreement can properly control the risk of merger and reduce the loss of merger failure.However,it is worth noting that the phenomenon of merger failure still exists even when the performance compensation agreement is introduced.Therefore,it is not only of theoretical significance to identify the risks in m&a under the performance compensation agreement,but also of guiding significance to the risk control of m&a in the future.As a risk prevention and control mechanism,will the performance compensation agreement itself affect the m&a activities and generate new m&a risks?Secondly,how will the design of performance compensation agreement affect the economic consequences of mergers and acquisitions?This article combines the xinhua chengdu German medical m&a case,through the analysis of the middle of its merger and acquisition activity before,identify performance compensation agreement to the Lord and in the process of m&a risk factor,and through to the Lord and the financial performance before and after the merger and acquisition and capital market were analyzed,finally draw the conclusion:performance compensation agreement is both a blessing and a curse,can to a certain extent for the main and side shifting risk,but also can produce valuation risk,performance risk of goal setting and compensation mode selection risk,derivative risks.These risks will also have a certain impact on the economic consequences of enterprises.The "double-high"compensation agreement will send a false positive message to the capital market,push up the stock price,and lay a hidden danger for the collapse of market value.The improper design of the compensation agreement leads to the decrease of the m&a performance,the continuous decrease of profitability and solvency,and causes the loss of investors'confidence,and the stock price is halved one after another,finally resulting in the "three losses" situation of the acquirer,the acquiee and the small and medium investors.Therefore suggested that mergers and acquisitions in an arrangement with the acquired results compensation agreement,to recognize the value of performance compensation agreement with risk,cannot completely depend on the performance compensation agreement to avoid risk,can improve the target company valuation process,the reasonable setting performance targets,mergers and acquisitions in installments of consideration and flexible using the method of compensation mode,effectively reduce the compensation agreement with derivative risk,improve the m&a performance.