Research On The Application Of Valuation Adjustment Mechanism In Private Equity Investment

With the development and perfection of China’s capital market,China has entered a new era of private equity investment.China is vigorously advocating public entrepreneurship and innovation.What’s more,real economy can’t develop without help of the capital.However,due to the existence of information asymmetry between investment and institutional investors,investors face a larger investment risk and would be usually more cautious.Smalland medium-sized enterprises difficult to obtain financing.The use of valuation adjustment mechanism can,to a certain extent,alleviate this contradiction and find a balance between the divergence of interests between investors and financing firms.At present,in China’s capital market,the valuation adjustment mechanism has been widely used.But at the same time a lot of fail case give rise to doubt and vigilance.The relevant laws and regulations on the valuation adjustment mechanism are not yet sound,so the application of the valuation adjustment mechanism in private equity investment remains to be improved.In this paper,the empirical study and case study are used to study the JD Capital as the research object,and the newly listed enterprises of JD Capital are listed as the research samples to analyze the valuation adjustment mechanism with JD Capital.From the perspective of private equity investors,we discuss the formation of valuation adjustment mechanism,the terms of the set,results and other issues.JD Capital as a well-known investment institution in China,with a large number of investment cases,has a certain typical,and information disclosure is more adequate as research basis for this thesis.The study found whether investor use the valuation adjustment mechanism would be influenced the subjective and objective ability.Whether investors signed is closely related on the general value of the investment,the size of the invested enterprises,the proportion of investment and financing and other factors.In this paper,through the relevant research,we suggest investors in the application of valuation adjustment mechanism must take a prudent attitude,and in the choice of valuation adjustment mechanism should be based on different enterprises diversification.In addition,in order to promote the development of private equity investment industry,it is recommended that China give clear provisions to protect the interests of both sides as soon as possible in the laws and regulations.