On VAM In Private Equity Investment

As an investment tool brought from developed countries, valuation adjustment mechanism (VAM), on one hand, can guarantee investors’benefits, and on the other hand, can effective inspire enterprise management. With the flourishing of financial market, the utilization scope of VAM is continually expanding. Along with many successful commercial cases, there are disputes. Currently, our laws and regulations related to this aspect are not comprehensive. Therefore, how to make the VAM adapt to China’s laws is particularly urgent.First, the basic principle of VAM is introduced in the article and the legal characteristics of VAM are summarized though analyzing its connotation and its existence value is discussed from the aspect of economics of law. In the second part of this article, the legal attribute of VAM is analyzed by combing with the first VAM dispute in our country to analyze VAM’s legal force. It is pointed out that VAM, as a conditional contract, has legality. In the third part of the article, the current situation of legislation for VAM is introduced firstly to indicate its absences in Contract Law, Company Law and other related laws and regulations and analyze the macroscopic and microscopic risks during its implementation. At last, the author carried out track searches for preventing the above-mentioned risks and gives some detailed operational approaches.During the article, various kinds of cases are combined to analyze relative theories. In this way, the unacquainted concept of VAM is better explained, the validity of VAM is better affirmed and the risks of VAM are better analyzed and prevention measures are better pointed out. Therefore, the value of VAM can be confirmed and disputes during use can be reduced to play its full role to solve enterprises’problem of financing difficulty, at the same time, protect investors’ interests, improve economic growth and achieve win-win situations. It is certain that the points in the article are to be verified by more practices. I hope it have certain reminding significance.