A-shares continued to slump, and data in late November showed that 800 companies were queuing IPOs (initial public offerings) and the competition was fierce. 2012 is still a difficult year for PE (private equity investment). When PE enters the enterprise, it sometimes signs a gambling agreement. The two parties agree to list within a certain period of time. If the listing requirements are not met, PE has the right to request the enterprise or major shareholder to buy back the shares. The two parties also agree that if they reach within a certain time limit Less than a certain performance, companies must compensate PE. Yongle Electric and Morgan Stanley, Prince Milk and Goldman Sachs and other investors have been mad at the gambling.
In China, the gambling agreement has caused great controversy, and today it is almost equal to a piece of paper.
Judging from this year's economic figures, many domestic companies are facing a shrinking market, difficulties in operations, a sharp decline in profits, and even some companies have a bad situation of capital chain breaks. There is no money in the enterprise account, and there is no ability to compensate PE. Even if it is necessary to buy back the shares in the hands of PE, the major shareholders will delay and block the exercise of PE. The risk of investors is great. PE as a financial investor, the pursuit of wealth growth, corporate performance can not meet the requirements, PE can only watch the "zombie" helpless, the actual commitment to the gambling agreement is only 50%.
In the second half of this year, a judgment result in Gansu further stimulated the nerves of PE and VC (risk investment).
Due to a "gambling" word on the gambling agreement, the court judged that "the gambling" was invalid by the investor's abuse of the shareholder status and the risk sharing. In this case, the investor (Haifu Investment) invested RMB 20 million in Gansu Shiheng in 2007. The two parties agreed that the 2008 performance should not be less than 30 million yuan, otherwise the investor will be compensated. If the performance is achieved, the investor's high premium investment will only be exchanged for a small portion of the equity, and the vast majority of the premium will be transferred to the financier. How does this violate risk sharing?
In developed markets, investors use it to control risks. Once the business operation fails to meet expectations, the financing party must pay a high price. This is a risk management mechanism. It is translated as a “gambling agreement†in China, and the gambling is very negative. So the outside world has felt that PE has become a wicked capitalist and vampire.
In fact, it is based on the “Performance†guarantee, which is a normal phenomenon in any industry. Why is it not accepted in the field of investment? Investment is also the purchase of products, there are certain expectations, investors invest money, of course, there are expectations, otherwise what "purchase" products? Many people do not look at the role of the gambling agreement from a fair perspective. This can only explain the immature format and the issue of business ethics.
Is moral judgment related to the tool of gambling agreement? When companies introduce PE, they often exaggerate their performance and prospects. Some entrepreneurs have done things themselves in the process of running a business. They are willing to gamble and lose. They are the rules of the game. You can choose not to gamble. Why should you gamble on how much your profit will reach this year? How much will it be in three years? If you can't afford it, don't say how good your future performance is.
The gambling agreement is only a rule, and there is nothing wrong with it. PE takes the money of the LP (limited partner) and is also responsible for the LP. Enterprises looking for bank loans have to pay high interest rates. Why did the company take the money from PE and sign a gambling agreement? Once a problem occurs, it will not be recognized. This actually violates the contractual spirit of the business community.
The regulatory layer has an attitude of not accepting the gambling agreement in the issuance of new shares. The attitude of the CSRC is normal. It is not aimed at the “gambling agreement†but on the possible impact of the gambling agreement. The starting point is fairness. There is no contradiction with the gambling agreement.
In the chaos of NVC lighting, Saifu was smashed with blood, and Wu Changjiang kidnapped employees and partners as hostages, which was actually a lack of business ethics. As a major shareholder of NVC, he came out to create a company that violated the competition of the same industry, and the damage was also the interests of the public shareholders. In fact, the asymmetry of due diligence makes it difficult for the public to fully understand the agreement between investors and enterprises. Once it falls out, under the attack of “protecting national enterprises†and “conspiracy theory, investors often discredited and I got a slap in the face and finally had to compromise.
In the current situation that the gambling agreement is not fully recognized by the society and recognized by the law, PEs must protect their own interests. They can only carefully design the gambling clauses and block as much as possible the loopholes that may arise when signing the agreement with the financing party. Avoid the financing side asking for price, and finally lost the lawsuit against the court.
(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)
In China, the gambling agreement has caused great controversy, and today it is almost equal to a piece of paper.
Judging from this year's economic figures, many domestic companies are facing a shrinking market, difficulties in operations, a sharp decline in profits, and even some companies have a bad situation of capital chain breaks. There is no money in the enterprise account, and there is no ability to compensate PE. Even if it is necessary to buy back the shares in the hands of PE, the major shareholders will delay and block the exercise of PE. The risk of investors is great. PE as a financial investor, the pursuit of wealth growth, corporate performance can not meet the requirements, PE can only watch the "zombie" helpless, the actual commitment to the gambling agreement is only 50%.
In the second half of this year, a judgment result in Gansu further stimulated the nerves of PE and VC (risk investment).
Due to a "gambling" word on the gambling agreement, the court judged that "the gambling" was invalid by the investor's abuse of the shareholder status and the risk sharing. In this case, the investor (Haifu Investment) invested RMB 20 million in Gansu Shiheng in 2007. The two parties agreed that the 2008 performance should not be less than 30 million yuan, otherwise the investor will be compensated. If the performance is achieved, the investor's high premium investment will only be exchanged for a small portion of the equity, and the vast majority of the premium will be transferred to the financier. How does this violate risk sharing?
In developed markets, investors use it to control risks. Once the business operation fails to meet expectations, the financing party must pay a high price. This is a risk management mechanism. It is translated as a “gambling agreement†in China, and the gambling is very negative. So the outside world has felt that PE has become a wicked capitalist and vampire.
In fact, it is based on the “Performance†guarantee, which is a normal phenomenon in any industry. Why is it not accepted in the field of investment? Investment is also the purchase of products, there are certain expectations, investors invest money, of course, there are expectations, otherwise what "purchase" products? Many people do not look at the role of the gambling agreement from a fair perspective. This can only explain the immature format and the issue of business ethics.
Is moral judgment related to the tool of gambling agreement? When companies introduce PE, they often exaggerate their performance and prospects. Some entrepreneurs have done things themselves in the process of running a business. They are willing to gamble and lose. They are the rules of the game. You can choose not to gamble. Why should you gamble on how much your profit will reach this year? How much will it be in three years? If you can't afford it, don't say how good your future performance is.
The gambling agreement is only a rule, and there is nothing wrong with it. PE takes the money of the LP (limited partner) and is also responsible for the LP. Enterprises looking for bank loans have to pay high interest rates. Why did the company take the money from PE and sign a gambling agreement? Once a problem occurs, it will not be recognized. This actually violates the contractual spirit of the business community.
The regulatory layer has an attitude of not accepting the gambling agreement in the issuance of new shares. The attitude of the CSRC is normal. It is not aimed at the “gambling agreement†but on the possible impact of the gambling agreement. The starting point is fairness. There is no contradiction with the gambling agreement.
In the chaos of NVC lighting, Saifu was smashed with blood, and Wu Changjiang kidnapped employees and partners as hostages, which was actually a lack of business ethics. As a major shareholder of NVC, he came out to create a company that violated the competition of the same industry, and the damage was also the interests of the public shareholders. In fact, the asymmetry of due diligence makes it difficult for the public to fully understand the agreement between investors and enterprises. Once it falls out, under the attack of “protecting national enterprises†and “conspiracy theory, investors often discredited and I got a slap in the face and finally had to compromise.
In the current situation that the gambling agreement is not fully recognized by the society and recognized by the law, PEs must protect their own interests. They can only carefully design the gambling clauses and block as much as possible the loopholes that may arise when signing the agreement with the financing party. Avoid the financing side asking for price, and finally lost the lawsuit against the court.
(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)
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