Analysis Of The MN Company's Financial Effect Of Valuation Adjustment Mechanism In Private Equity

Private enterprises play an vital role in China's economic development.But the market in China now is imperfect,so when the private company is lack of qualifications,it is difficult for them to have high loans from banks or list for finance directly.The development of private equity has opened a new path for private enterprises.Using private equity financing,enterprises can introduce advanced management and financial system,laying a solid foundation for them to enter the capital market smoothly in the future.The enterprises often sign a valuation adjustment mechanism with investors.This agreement is a contract signed between the financiers and investors based on uncertainty in the future.It is a common tool to reduce investment risk.The risk of private equity financing depends to a large extent on the implementation of the betting agreement,but the betting agreement is a double-edged sword.If used properly,it can achieve a win-win situation between the financiers and investors.If used poorly,the financing enterprise may lose control.Therefore,it is of great practical significance to study the financial effects of the mechanism on financing enterprises in private equity financing.Based on the case of MN company,this paper pays attention to the whole gambling process between MN company and private-equity investment enterprises from the perspective of financiers.The content and characteristics of the betting agreement are analyzed in detail.The financial effects of the betting agreement on MN company are mainly studied from the aspects of profitability,operating ability,financial leverage effect,capital structure,economic value added,control risk and so on.Based on the relevant research results of scholars at home and abroad,using the real financial data during the signing of the betting agreement by MN Company,this paper makes a longitudinal investigation of the changing process of the company's financial situation and a horizontal comparison with other companies in the same industry,and explores the positive and negative dual wealth brought by the betting agreement to the financing enterprises in private equity financing.Work effect.The result shows that if we do not control the negative financial effects brought by the betting agreement,it will bring negative impacts such as the risk of receivable recovery,the decline of asset turnover capacity and the loss of corporate control.Therefore,in view of the three stages of the betting process,this paper puts forward relevant suggestions to give full play to the financial positive effect of the betting agreement.This paper chooses the first successful case of betting in our country and innovatively analyses the positive and negative financial effects brought by the betting agreement.It is suggested that when signing the betting agreement,enterprises should set up betting clauses in line with their own reality,avoid blind imitation and pursue unrealistic performance.This study has significance for enterprises wishing to finance in this way in the future.