The Valuation Adjustment Mechanism In Private Equity Transactions

Valuation Adjustment Mechanism(“VAM”)is a term usually adopted by contracts with respect to private equity transactions in China.However,neither the legal nature nor the validity of VAM is clear under China's legislation,commercial transactions or theoretical research.In view of judicial practice's function of settling disputes and constructing rules,this thesis attempts to analyze the legal nature,validity and implementation method of VAM from the Chinese judicial perspectives.Chapter One analyzes the connotation of private equity and the connotation,classification,cause of formation and functions of VAM.Chapter Two clarifies the background,claims,criteria and results of four judicial cases,analyzes the difference of recognition of the legal nature and validity of VAM by different judicial organs and the reasons of such differences.Chapter Three mainly analyzes the legal nature and legal validity of VAM from the perspective of Contract Law and Corporate Law and especially pays attention to the legal validity of VAM covenanted under special conditions.Chapter Four briefly discusses the possible implementation methods of VAM abroad,and mainly focuses on the feasibility of implement VAM in China under the VAM clause entered into by and between investor and the target company.Chapter Five is the epilogue,which mainly states that commercial litigation and arbitration shall follow the guidance of judicial policy and strive to create a legal environment that promotes China's commercial transactions,and this chapter also provides some suggestions to the corporate law regime of China.