The Investigation Of The Effect Of VAM In PE Financing

In the process of PE financing,it is a common phenomenon to sign a Valuation Adjustment Mechanism(VAM)agreement between the two sides.Most foreign enterprises sign VAM agreement in capital activities.With the development of China's economy,more and more enterprises try to grow with the help of capital.However,in the process of PE financing,there is information asymmetry between investors and financiers,and the future valuation of the enterprise is inaccurate.In order to reduce the risk of valuation,the two sides also signed a VAM agreement as the abroad.Mengniu's success in VAM has inspired many domestic enterprises.Nowadays,it is almost indispensable for enterprises to sign VAM in PE financing.So in the process of PE financing,what elements should we pay attention to when signing the VAM agreement,and what impact will the signing of the VAM agreement bring to the enterprise?This paper focuses on these two kinds of problems.This paper mainly introduces the theory in the PE financing process of the implementation of VAM agreement and China Dongxiang,s VAM case analysis in the process of PE financing and its effect.Through the case analysis of China Dongxiang this paper compares the contractual elements of the VAM agreement with other cases,and tries to draw the key points of the contract that should be paid attention to when signing the VAM agreement.At the same time,from the financial and non-financial performance of China Dongxiang to analyze the economic consequences of VAM,this paper trying to conclude that China Dongxiang has been well developed and achieved high growth.After analysis,this paper draws a conclusion that is when an enterprise signs a VAM agreement with the investor,the contractual elements of the VAM agreement should be set reasonably.At the same time,the development strategy should be formulated reasonably after the VAM agreement has been signed.Considering the long-term development of the enterprise,the result of the VAM will be successful.Through this study,it has certain guidance for enterprises to sign VAM agreements and follow-up development,and at the same time,it provides more ideas for the relevant research on the signing of VAM agreements in the process of PE financing.