Study On The Causes And Economic Consequences Of The Failure Of Performance Commitment In Merger And Acquisition

With the continuously active M&A market,the performance commitment is also broadly used.At the same time,many problems have been exposed and the phenomenon of the failure of performance commitment is one of the major problems that arouse the attention of the capital market.The frequent occurrence of the phenomenon of the failure of performance commitment has an adverse effect on the development of listed companies and the orderly operation of the capital market.Therefore,it is important to reduce the phenomenon of the failure of performance commitment to promote the steady development of the capital market.Based on this background,the thesis selects a typical case to deeply explore the causes and economic consequences of performance failure and puts forward countermeasures to prevent performance failure.The thesis uses the literature analysis method and case study method and qualitative and quantitative analysis method to study the problem of the failure of performance commitment of Baihuacun’s merger and acquisition of Huawei Medicine.First of all,the thesis reviews the research status of performance commitment and the failure of performance commitment,and defines related concepts such as the failure of performance commitment.Then the thesis introduces the overview of the failure of performance commitment of Baihuacun’s merger and acquisition of Huawei Medicine.In this process,the thesis firstly summarizes the overall situation of the failure of performance commitment in M&A.Then,the background of merger and acquisition of the case enterprise,the reasons for merger and acquisition and signing performance commitment are analyzed,and the process of merger and acquisition,performance commitment arrangement,the situations of the failure of performance commitment and performance compensation are introduced.Then the thesis deeply analyzes the causes and economic consequences of the failure of performance commitment.In the process of analysis,a combination of qualitative and quantitative analysis is adopted.Through the collation and analysis of relevant data and calculation of financial indicators,reliable research conclusions can be obtained.Rich and detailed data results can enhance the reliability and persuasiveness of the thesis.Finally,the thesis puts forward some countermeasures to prevent the failure of performance commitmen from different angles.The thesis draws the following conclusions: firstly,the motivation of M&A includes improving the company’s profitability,getting rid of delisting risk,and transforming business to achieve long-term development of the company.The motivation for enterprises to sign performance commitment includes easing the information asymmetry between the two sides of the merger and acquisition,conveying the signal of good operation of the target enterprise and reducing the agency conflict.Secondly,the reasons for the failure of performance commitment of Huawei Medicine mainly include the adjustment of macro-policies of the industry,the overvaluation of underlying assets,the too high performance commitment targets,and the insufficient merger and acquisition integration.Thirdly,the failure of performance commitment of Huawei Medicine produces many adverse consequences for the acquirer,including the reduction of financial performance and market performance,substantial impairment of goodwill,and the reduction of corporate social reputation.And fourthly,countermeasures to prevent the failure of performance commitment include: enterprises should carefully choose the target of merger and acquisition;enterprises should reasonably value the underlying assets;enterprises should improve the performance commitment agreement;enterprises should strengthen merger and acquisition integration.