The Case Study On The Failure Of General Processor Technology’s Performance Betting

VAM agreement is essentially a valuation adjustment mechanism,because the future development of the enterprise is difficult to be accurately predicted,so the investment and financing parties can sign the VAM agreement and set investment conditions according to the future business situation,which can not only effectively solve the information asymmetry problem of the VAM parties,but also play an incentive effect on the financier.Gambling first originated in Europe and the United States,and since the 90 s,with the introduction of private equity,it has been widely used in corporate mergers and acquisitions and financing activities.In 2003,China first introduced the gambling agreement.With the widespread application of the gambling agreement,cases of failed gambling have become common and significant losses have been incurred.Therefore,it can be seen that gambling can not only bring funds,but also bring significant risks and operational pressure to enterprises.Enterprises that fail in gambling face the fate of financial losses,asset sales,and even bankruptcy.At present,China’s financing environment makes it difficult for some growing enterprises to obtain funds through traditional channels,so they can obtain the funds needed for growth by signing VAM agreements,which requires enterprises to use VAM agreements reasonably.By combining theory with practice,this paper first briefly elaborates on the terms involved in this article,such as VAM protocol and the constituent elements of VAM protocol,and introduces related basic theories such as information asymmetry theory,game theory and incentive theory.Then,the basic situation of the enterprises of the financier General Processor Technology and the investor National Technology was briefly introduced,and the terms of the gambling between General Processor Technology and National Technology were briefly introduced,and the result of the failure of General Processor Technology’s gambling was concluded from the completion of the terms.Then,from the three perspectives of the external market environment,General Processor Technology’s operation and the setting of VAM clauses,the reasons for its gambling failure are analyzed,and it is found that General Processor Technology is not only in the downturn in the international market,but also in the fierce competition in the domestic market,and General Processor Technology’s financial situation before the VAM is poor,the focus of product research and development is deviated from the high-profit field,and the high valuation leads to improper setting of VAM clauses.Combined with the relevant theories and research methods explained above,from the failure of General Processor Technology’s gambling to extract its countermeasures and suggestions that may lead to the failure of gambling when signing a gambling agreement,if General Processor Technology wants to avoid gambling failure,it must first actively respond to changes in the external environment,not only need to grasp the development trend changes of the industry,but also improve its own competitiveness;Secondly,to formulate a reasonable business strategy of the enterprise,not only to improve the internal management level of the enterprise,but also to shift the focus of R&D to high-profit areas;Finally,set flexible gambling terms,reasonably assess their own value,and set up gambling grading and phased gambling standards.It is hoped that through the analysis of this paper,the real reasons for the failure of gambling can be found out and countermeasures will be provided,so as to provide a reference direction for other enterprises to sign gambling agreements in the future.