Analysis Of The Application And Effect Of Valuation Adjustment Mechanism In The Acquisition Of Wei Chuang Group Co.,Ltd.

As an innovative financial instrument,the Valuation Adjustment Mechanism is not only an important part of the investment agreement,but also an effective tool in corporate mergers and acquisitions.Its implementation can achieve reasonable and fair investment transactions to the greatest extent.However,China's development of the gambling agreement is still in its infancy.At present,there is only a small amount of research,and most of it is carried out from the perspective of law,little research focusing on practical aspects.In the context of the “high valuation,high commitment” in the wave of corporate mergers and acquisitions,Analyze risks such as Valuation Adjustment Mechanism that is subject to a single profit performance.In this constraint setting,the gambler sometimes even takes short-term behavior in order to meet the short-term performance requirements,which in turn causes the long-term value of the enterprise to be degraded.When the acquiree fails to meet the agreement requirements and refuses to fulfill the agreement obligations,the investor has to file a lawsuit,and the lawsuit is facing legal risks.Even if the merger is successful,the high compensation or reward content entered into in the Valuation Adjustment Mechanism will also hit the business performance.This paper takes Wei Chuang Group Co.,Ltd.(hereinafter referred to as “Wei chuang Shares”)as the research object for the four M&A activities to achieve strategic transformation.On the one hand,it deeply analyzes the process and effect of applying the Valuation Adjustment Mechanism in M&A activities.On the other hand,it reveals the risks that enterprises may use in the process of mergers and acquisitions by using the tool of the Valuation Adjustment Mechanism.I hope that companies with the same motives in the future will be able to use the same means to achieve the purpose of mergers and acquisitions.