| As a kind of valuation adjustment agreement, the VAM has received extensive practice of domestic equity market at home and abroad. How scientific and rational design on the agreement, improve the effect of the agreement has been the focus of attention from all walks of life.This article to the VAM in the survey of the present situation of C hina ’s equity market practice as the foundation of research, choose Jiuding Investment and Eastar on the agreement as a typical case study. This paper introduces in detail the background of the agreement, the specific content of the agreement and the implementation. And using the agency-contract, the dynamic and repeated game, the reputation model, the Dupont Analysis and relevant theory, further expounds the VAM the use of motivation, content, game theory, the costs and benefit, t he risk countermeasure and so on. The main conclusions are as follows:(1)the VAM both to meet the demand by the investor’s equity financing and to avoid the risk of information asymmetry, plays a positive role to realize win- win situation of equity investment.(2)The core terms of the VAM is equity floating proportion, terms of the agreement will be set up around the capital adjustment mechanism bet chip, exercise conditions, compensation rules and exit arrangement details.(3)Asymmetric bet against the agreement of revenue. Investment even can usually get high return with guaranteed investment income; by investees could obtain high yield or paying huge compensation.(4)In terms of reputation, with the structure of the repeated game, the VAM can be more effective restrain and incentive the investee behavior.(5)Specific application to equity investment, the VAM is still having legal risk, default risk and operational risk, contract design needs to be further improved.Finally, the article tries to refine the general solution and po licy recommendations about the VAM using the key issues in Private Equity, which can be promoted for reference. |
