Research On The Motivation And Economic Consequences Of Anjie Technology’s Acquisition Of Weibo Precision’s High Performance Commitments

In M&A transactions,setting performance commitment agreements has become the norm.The performance commitment agreement is an important system to regulate inflated valuations in corporate M&A transactions,which can reduce information asymmetry,guarantee the performance of the acquired company and safeguard the rights and interests of SME shareholders.While the performance commitment agreement has created favorable financing conditions for companies with growth potential in the future,the hidden dangers behind it have gradually emerged.In particular,the acquired company has repeatedly failed to fulfill its highperformance commitments and faced the dilemma of performance compensation disputes.In recent years,cases of unfulfilled performance promises have not been uncommon.The motivation of high performance commitments has attracted people’s attention,and its economic consequences have caused adverse social impacts,and people have paid more and more attention.This paper collects and organizes the literature about performance commitments,and gives the relevant theoretical basis;then,taking Anjie Technology’s acquisition of Weibo Precision as the case object,it deeply analyzes the motivation and economic consequences of signing high performance commitments in merger cases.The specific content includes the following three aspects:(1)Briefly introduce the transaction objects related to the case and the transaction process of M&A and reorganization,and lead to the following case analysis on high performance commitment.(2)Based on the case itself,from three aspects: principal-agent theory,signaling theory and valuation adjustment mechanism of performance commitment analyze the motivation of signing high performance commitment in Anjie Technology’s acquisition of Weibo Precision.(3)Analyze the economic consequences of implementing highperformance commitments from the perspectives of market response,benefit transmission,synergy,and goodwill impairment.Through the research of this paper,it can be found that the motivation for signing high-performance commitment agreements in M&A and restructuring transactions is that the target party wants to push up the transaction price through highperformance commitments,and the acquirer uses high-performance commitments to transfer high-value M&A risks,reduce information asymmetry and reduce agency.Costs and send a positive signal to boost investor confidence.Although the market reaction and synergies of acquirers after signing high-performance commitments have obvious positive effects in the short term,the positive effects under high-performance commitments in M&A are unsustainable,but it provides convenience for the major shareholders to accurately reduce their holdings and cash out.Weibo Precision has repeatedly failed to meet the performance commitments,resulting in huge impairment of goodwill,and its long-term operating performance is negatively correlated.Last but not least,some suggestions are put forward for the rational application of performance commitment agreement in corporate mergers and acquisitions.,how intermediaries can exert management and control functions,and how regulatory authorities can improve performance commitments in mergers and acquisitions.This article provides a reference for other companies that sign performance commitment agreements in mergers and acquisitions in the future.