Research On Meidu Energy's Gambling Failure

Valuation adjustment mechanism were first introduced to China from western countries and were used in private equity financing as a way to adjust valuations.With the coming of the merger wave in China,the merger activities of enterprises are more and more frequent,and the accompanying information asymmetry problem increase the merger valuation risk.In this case,the Valuation adjustment mechanism begins to be applied to the equity acquisition in China,and becomes a means for investors to reduce the valuation premium risk.While investors can take advantage of the Valuation adjustment mechanism to avoid weaknesses,reduce the investment risk,safeguard their rights and interests,but it still have deficiencies in the actual application process,such as the agreed performance promises for the subject company cannot achieve,or the realization of the terms of compensation without any protection measures,etc.,all of these can lead to Valuation adjustment mechanism can not complete the mission of reducing the risk of merger and acquisition.Whether the Valuation adjustment mechanism can succeed or not will have a huge impact on both sides of the merger and acquisition.Nearly 70% of the Valuation adjustment mechanism in China fail due to substandard performance and other reasons,failing to play a positive role,and the performance of the merger and acquisition companies will also be affected.Therefore,in order to improve the success rate of Valuation adjustment mechanism,it is necessary to deeply analyze the reasons of the failure of bet and try to solve the corresponding problem so as to make the Valuation adjustment mechanism play its due role.Using case analysis,this paper chooses the Mei Du Energy's merger and betting against DLG case as the research object,first combed the previous agreement the motivation of using the Valuation adjustment mechanism,performance,influence,bet against failure reasons and research results in aspects of risk prevention and control,found that Chinese scholars to bet in acquisition less analysis of the causes of failure.After that,this paper introduces the gambling case of Mei Du Energy,which roughly explains the situation of the two companies,the motivation of the merger and gambling,the contents of the Valuation adjustment mechanism and the failure result of the gambling.Subsequently,this paper deeply analyzes the reasons for the failure of the betting of Mei Du Energy from multiple perspectives,including the external market environment and internal operation of the target company,the setting of the Valuation adjustment mechanism and the betting behavior of the acquirer.Finally,this paper draws conclusions based on the case analysis and puts forward solutions from the perspective of the acquirer.Based on the result that the betting of Mei Du Energy was far less than expected,this paper deeply analysis the reasons for the failure of the betting,drew conclusions and put forward suggestions for improvement,hoping to provide reference for enterprises that use the Valuation adjustment mechanism in future mergers and acquisitions.