Study Of The Valuation Adjustment Mechanism Used In The Financing Of Nanguang Advertising

With the development of economy,the financing channels of Chinese enterprises have become diversified.In numerous financing channels,private equity financing is favored for its characteristics of high efficiency and low cost by more and more enterprises.In recent years,one kind of financial tools,similar to options,is frequently mentioned in private equity financing investment agreement,which is called Valuation Adjustment Mechanism(VAM).Due to wide application in the investment process from foreign investment institutions to domestic enterprises,VAM is introduce to domestic capital markets.The scope of the application of VAM in China is relatively extensive by the designing of investment transactions to make investment trading becoming more reasonable and fair.The enterprises choosing VAM is multi-level including mature enterprises and start-up enterprises.Although many companies that use VAM have failed,investors still want to sign a VAM with the financier in the investment agreement to protect their interests.According to present situation,VAM is one of the significantly effective methods to stimulate both sides and reduce the risk of investments.The VAM used in the financing of Nanguang Advertising was researched in this paper.According to the analysis of the motivation to corporate finance,the characteristics of the VAM and the risk in the VAM and so on,though there is adoptability in the form of financing,the settings of special terms and the form of VAM signed,the risk in aimless signing of VAM,high levels of VAM standard,the management behaviors,the audit of stock market listings and so on is still existed.Based on the summary of experience and the research of problem,The corresponding risk control measures are coming forward to provide some references in the using of VAM in future.