Research On The Legal Attribute Of Valuation Adjustment Mechanism In The Field Of Private Equity Investment

Valuation Adjustment Mechanism(VAM)is a common means of investment and financing in the field of private equity investment.VAM is translated into “gambling agreement” in China.“Gambling agreement” is more consistent with Chinese traditional culture context,though VAM has nothing to do with gambling.Its original meaning is “valuation adjustment mechanism”.By taking the occurrence of an uncertain thing or not as a standard,VAM adjusts the initial investment cost of the investor through the design of the clauses.In the case of asymmetric information and uncertainty of the income,the investor is willing to inject funds into the financing party through VAM.VAM is a mechanism for adjusting the cost of investment.To a certain extent,the valuation adjustment of VAM promotes the development of the private equity investment industry.In the meantime,a growing number of disputes related to VAM are becoming acute.The definition of the legal attribute of VAM has always been the focus of debate in the academic and judicial practice circles.In view of this problem,many arguments in academic circles have been debated,such as the theory of "aleatory contract","option contract ","conditional contract" and so on.Each theory has its own uniqueness,but it is also difficult to explain.At present,the academic circles have not yet formed a more unified view.In the judicial practice,different courts have different views on the legal attributes of VAM.Combined with the selected cases,after statistical analysis,it is found that in the effective referee documents,the court will define the legal attributes of VAM as options,conditional contracts,anonymous contracts and minimum-guarantee clauses.In the process of defining the legal attributes of VAM,there are such problems as most courts do not positively define the legal attributes of VAM,the inconsistent decisions of different courts on the legal attributes of VAM,and the lack of theoretical support for the legal attribute of VAM in judicial referee documents.The existence of these problems will not be conducive to subsequent trials of the same type of cases,which will affect the validity of VAM,the application of the law,and further affect the investment decision of the capital market,which is not conducive to the development of the private equity industry.VAM is a concept involving many fields,such as economics,management and law.In view of the definition of the legal attribute of VAM,we draw on the accounting treatment methods of investors and financiers for VAM from the perspective of management,and then proceed from the basic theory of civil law.Finally,it is concluded that the legal attribute of VAM should be defined as a mixed contract containing the main clause and the general clause.This paper defines the legal attributes of VAM from the perspective of mixed contracts,in order to solve the problem of defining its attributes,so as to provide references for academia and judicial practitioners.