Research On The Economic Effect Of Yuewen Group's Acquisition Of New Classics Media Under Performance Commitmen

Through M&A and restructuring,enterprises can expand their scale and seek new profit growth points.With the diversified development of China’s economy,more and more enterprises use performance commitment in M&A to reduce the risk of M&A.Therefore,performance commitment is considered as a way of self-protection in enterprise mergers and acquisitions,which can help enterprises better achieve mergers and acquisitions.Therefore,enterprise mergers and acquisitions based on performance commitment are also popular,but there are also many cases of failure in performance commitment mergers and acquisitions.How to measure the economic effect of performance commitment M&A,find out the risks and take precautions is very important.This paper mainly studies the case of China literature limited’s acquisition of New classic media using performance commitment.First of all,in terms of literature review,it combs the relevant literature on four aspects of performance commitment M&A motivation,economic effect,risk,and response suggestions,and summarizes the research results of the existing literature.This paper summarizes the relevant concepts and theoretical basis,and constructs the impact path of performance commitment leading to economic effects,which provides theoretical support for the paper writing.Secondly,based on the methods of event study,financial indicators and case analysis,this paper analyzes the economic effect of China literature limited’s acquisition of New classic media’s performance commitment.The event study method is used to analyze the short-term market response before and after the modification of performance commitment;Use the financial indicator method to evaluate the relevant financial impact of performance commitment on the company from four aspects of profitability and growth ability;The calculation of EVA value objectively reflects the change of enterprise value before and after the modification of performance commitment.Through summary and analysis,it is found that there are the following risks in the performance commitment of China literature limited’s acquisition of New classic media: first,the risk of inaccurate valuation;The second is the unreasonable risk of performance commitment design;Third,the risk of goodwill impairment.Corresponding countermeasures and suggestions are given for the existing risks.First,reasonably evaluate the enterprise value of the merged party;Second,set reasonable performance commitment and compensation mechanism;Third,strengthen the supervision of the merged party and prevent the impairment of goodwill.This paper hopes to provide experience and inspiration for other enterprises that want to achieve mergers and acquisitions by signing performance commitments through studying the case of China literature limited’s merger and acquisition of New classic media,so as to contribute to the success of subsequent mergers and acquisitions.