Hailu Group’s Merger And Acquisition Of Jiangnan Integration Performance Commitment Failure Study

Mergers is the enterprise to expand business scope,a means to optimize industrial structure,compared to the enterprise existing resources,namely connotative development,through mergers and acquisitions this extension development model,due to the acquired enterprise in mergers want to expand business development is more perfect,technology is more mature,and later promotion space is large,usually,pay the consideration than the enterprise through connotative development of the cost is usually much lower.Therefore,in order to use less funds and obtain high-quality assets,enterprises need to pursue goals in mergers and acquisitions.Considering the asymmetry between the two parties to the merger in terms of information access,the buyer in the merger is worried that the buyer maliciously speculates on the assets,resulting in an increase in the price of the assets,so a guarantee system is needed to make a bottom guarantee for the buyer.At this time,the performance commitment system came into being,which requires the seller in the merger to make a guarantee for what it wants to sell,that is,how much performance it has achieved in the later stage of the commitment as a form of expression,to ensure that the buyer will not be impaired due to the beginning of overvaluing the asset after purchasing the asset.With this guarantee mechanism,more and more acquirers have reached a consensus on the determination of consideration,so that performance commitments have been widely used in M&A activities.However,it needs to be understood that performance commitments cannot be 100% eliminated from risks,and in recent years,many enterprises have made performance commitments that cannot be realized due to the high valuation value,and the late guarantee mechanism cannot be implemented,resulting in the failure of the entire merger and acquisition cases abound.This paper takes the failure of hailu Group as an example,Through the literature reference method and the case analysis method,Using research literature from relevant directions and announcements and statements issued by the Sea and Land Group as information sources,Starting from the agreed performance commitment of Hailu Group to acquire Jiangnan Integration,It is analyzed that the parent company’s value evaluation and merger scheme design in the initial stage of merger and acquisition are insufficient,During the commitment period,the supervision of Jiangnan Integration is not in place,The lack of compensation and guarantee mechanism in the later period,Finally,according to the beginning and end of the whole transaction event,it is proposed that various risk issues should be considered comprehensively in the evaluation before the merger,Reasonable design of the performance commitment scheme,Strengthen supervision in daily operations,Increase the guarantee mechanism to prevent the possible late compensation and litigation risks,Provide a reference role for subsequent studies.