A Case Study On The Prevention And Control Of M&A Risk By The Payment Program In Hybrid M&A

With the implementation of supply-side structural reforms,traditional enterprises are in fierce competition and develop slowly,they are urgent to achieve transformation and upgrading through M&A.Under this background,the number of hybrid M&A for the purpose of diversification strategies is increasing.However,the risk of hybrid M&A is high.current payment program in our country is relatively single,the standards of performance commitments are difficult to meet in the “double high” M&A,and the risk of goodwill impairment is high.How to design a reasonable payment program to control merger risks is the main issue of the thesis.This thesis analyzes the innovative payment program adopted by Kingswood M&A Longmen Education and analyzes how companies design payment programs to prevent M&A risks.First,the thesis analyzes the motivation of the merger,outlines merger transaction and identifies the risks of the three stages of the merger.Then,the thesis introduces the payment program,analyzes the prevention of M&A risk from three aspects of payment program: payment method,payment consideration,and payment arrangement.What is more,the thesis summarizes how the payment program design by Kingswood to prevent and control M&A risks.Finally,the thesis analyzes the effect of the company’s payment program on M&A risk prevention from five perspectives: the risk prevention of the company’s integration,financial,valuation,goodwill impairment and human resource integration.Through analysis,the thesis draws the following conclusions.In the first,the selection risk,valuation risk,and integration risk of winning bids in hybrid M&A are relatively high.Through the design of payment programs,the risk prevention of target selection,valuation,financial,equity dilution,and human resource integration can be achieved.Secondly,incentive programs are very important for hybrid M&A,and the design of reward consideration should be added.Finally,the design of payment program is very important to prevent and control merger risks.In hybrid M&A,companies should choose professional institutions and design payment program rationally to prevent and control merger risks.