Studies On The Valuation Adjustment Mechanism Case Of HX Group Under The Background Of PE Financing

As the increasingly opening finance and capital market in China’s deepening reform,private equity investment has private equity investment is also emerging.PE fund originated in the United States in the twentieth century has become the third largest financing mode for companies apart from bank loan and listed equity financing.With the development and gradual perfection of capital market,a valuation adjustment mechanism has gradually evolved in the field of private equity investment – “VAM”.With the expanding scale of private equity investment in China,more and more cases of “VAM” under the background of PE financing can be found.This paper consists of six chapters.Firstly,this paper has provided the literature review of the enterprise PE financing motivation,the strategic motivation and implementation effect of “VAM”.Secondly,this paper has organized relevant concepts of private equity(PE)financing and “VAM”,and used information asymmetry theory,incentive theory and option theory as the theoretical basis for paper compilation.In addition,the paper has systemized the situation that HX Group and L PE fund have signed “VAM” twice for the goal of going public,and then introduced this case.Next,the paper has analyzed and discussed the“VAM” case of HX Group.It firstly analyzed its strategic motivation and then analyzed its operational risk from the aspect of performance clausesetting,and predicted its financial risk by using F-fractional model.In the end,it proposed in promotion strategy of the fifth chapter to improve the success rate of reaching the standard of “VAM” by using repeated game model.At the same time,this paper proposed to adopt three measures of establishing a sound due diligence system,overcoming the short-sighted behavior of enterprise management for the purpose of risk prevention.In the end,the paper has recommended HX Group to adopt intension-type expansion as its main development strategy.Thus,analysis on the VAM case of HX Group under the background of PE financing can help PE fund,banks and other investors to conduct venture investment under the condition of asymmetric information between investors and financing parties.It can also help to provide scientific and reasonable reference for risk evaluation and control of enterprises and other financing parties under the framework of “VAM”.