Several issues that should be paid attention to in the evaluation of long term equity investment

There are 5 important ones.

1. How to trade? How is it filled?

The investment agreement should stipulate the structure of the transaction. The transaction structure refers to the way in which the investment and financing parties conclude the transaction, mainly including the investment method, investment**, delivery arrangement, etc. There are also a variety of investment methods, such as capital increase and share expansion, transfer of shares of original shareholders, and forms of creditor's rights; Of course, it can also be a combination of the above.

II. Prerequisites.

At the time of signing the investment agreement, there may be some unimplemented matters of the target company and the original shareholders, or factors that may change. In order to protect the interests of the investor, it is generally stipulated in the investment agreement that the relevant party will implement relevant matters or exercise certain control over variable factors, which constitutes a prerequisite for the implementation of the investment.

3. Recognition and Warranty.

For matters that are difficult to obtain objective evidence during due diligence, or situations that may hinder the transaction or harm the interests of the investor from the date of signing the investment agreement to the date of completion of the investment (transition period), it is generally stipulated in the investment agreement that the target company and its original shareholders shall make commitments and guarantees.

4. Valuation adjustment clause (VAM).

The valuation adjustment clause is also known as the VAM clause, that is, the controlling shareholder of the target company promises to the investor that if it fails to achieve the agreed operating indicators (such as net profit, main business income, etc.), or fails to achieve the target of listing, listing or merger and acquisition, or has other circumstances that affect the valuation (such as loss of business qualifications, material breach of contract, etc.), it will adjust the agreed investment** or withdraw early. Of course, there are various forms, such as shareholder buybacks of the target company.

5. Clause on rights.

In order to achieve exit in the event that the target company reduces or loses the value of the investment, the investment agreement also stipulates the protective clauses of ** equity, including but not limited to:

1. Accompanying the right to sell and the joint ** right clause. If the controlling shareholder of the target company intends to directly or indirectly transfer all or part of its equity to any third party, the investor has the right, but not the obligation, to sell the corresponding number of equity held by the controlling shareholder to the third party to purchase the equity for sale, under the same conditions, in preference to the controlling owner or in proportion to the shareholding between the controlling shareholder and the controlling shareholder.

2. Towing right Mandatory right clause. If, within the agreed time limit, the performance of the target company fails to meet the agreed requirements or fails to achieve the target of listing, listing or merger, or triggers other agreed conditions, the investor has the right to compel the controlling shareholder of the target company to jointly transfer shares to a third party with the investor in accordance with the transfer ** and conditions reached between the investor and the third party. This clause is sometimes a VAM clause.

Once the impairment loss of long-term equity investment is recognized, it cannot be reversed in subsequent periods.

The following issues should be paid attention to in the evaluation of long-term equity investment:

Clear purpose of assessment: The purpose of the assessment should be clear, such as whether it is for investment decision-making, accounting reports, tax declarations, etc.

Selection of evaluation methods: According to the characteristics of the evaluation object, select the appropriate evaluation method, such as market comparison method, income method, cost method, etc.

Comprehensive risk analysis: The assessment should fully analyze the risk factors such as the business environment, market conditions, and competitive conditions of the invested enterprises.

Financial data analysis: Through the analysis of the financial data of the enterprise, including the balance sheet, cash flow statement, income statement, etc., to understand the financial status and operating status of the enterprise.

Assessment report specifications: The assessment report shall comply with the requirements of relevant laws and regulations, including the report format, content, conclusions, etc., to ensure the authenticity and credibility of the assessment report. Assessment-related questions can be asked like a nod or ask a third-party assessment consultation from Zhenglian Kunjiang, and all questions will be answered.

Legal analysis: The cost of acquiring a long-term equity investment is determined, and the cost of acquiring a long-term equity investment refers to the full price paid when acquiring a long-term equity investment, or the fair value of non-cash assets is waived, or the fair value of the long-term equity investment is obtained, including taxes, handling fees and other related expenses, excluding the appraisal, audit, consulting and other expenses incurred to obtain the long-term equity investment.

Legal basis: Article 71 of the Company Law of the People's Republic of China The shareholders of a limited liability company may transfer all or part of their equity to each other. The transfer of equity by a shareholder to a person other than the shareholder shall be subject to the consent of more than half of the other shareholders.

Shareholders shall notify other shareholders in writing to solicit consent for their equity transfer, and if other shareholders do not reply within 30 days from the date of receipt of the written notice, they shall be deemed to have agreed to the transfer. If more than half of the other shareholders do not agree to the transfer, the shareholders who do not agree shall purchase the transferred equity; If you do not purchase it, you will be deemed to have agreed to the transfer. For the equity transferred with the consent of the shareholders, under the same conditions, other shareholders have the right of first refusal.

If two or more shareholders claim to exercise the right of first refusal, they shall negotiate to determine their respective purchase ratios; If the negotiation fails, the right of first refusal shall be exercised in accordance with the proportion of their respective capital contributions at the time of transfer. If the articles of association of the public cover field have other provisions on the transfer of equity, such provisions shall prevail.

The long-term investment of the enterprise is always invested with various assets as capital, and the assets used for long-term investment play the function of capital. Long-term investment appraisal is not only an assessment of the assessee itself, but also an audit, capital verification and evaluation of the invested enterprise or unit. Since there is a distinction between listed and unlisted, the evaluation will also be conducted in two categories: listed and unlisted.

1) Valuation of listed transactions**.

In the case of complete development and relatively normal trading, the market can basically be used as the basic basis for evaluation. However, in the case of incomplete development and abnormal transactions, the value of the investment in the long-term investment cannot completely depend on the abnormal market, but should be based on the intrinsic value or theoretical value of the company, and the value of the enterprise should be judged by the economic strength and profitability of the issuing enterprise.

2) The value assessment of the non-listed Jiao Brother Xiang Yi**.

1. Valuation of preferred shares. The annual return of the preferred shares can be calculated in advance based on the determined dividend yield, and then discounted or capitalized to obtain the appraised value.

2. Valuation of common stock. According to several trends in common stock returns, they can be divided into three categories: fixed dividend models, dividend growth models, and segmented models.

1. Accounting treatment of long-term equity investment valuation.

1) The cost of acquiring a long-term equity investmentDetermining the cost of acquiring a long-term equity investment refers to the total price paid when acquiring a long-term equity investment, or the fair value of non-cash assets or the fair value of the long-term equity investment, including taxes, handling fees and other related expenses, excluding the appraisal, audit, consulting and other expenses incurred for the acquisition of the long-term equity investment.

2) Accounting treatment of the difference in the valuation of long-term equity investment.

When the equity ratio increases, if the accounting of long-term equity investment is from the cost method to the equity method, the equity investment difference follows the retrospective adjustment method of retrospective adjustment and consolidated amortization; If it is from the equity method to the equity method, the calculation should be calculated in installments, and the future amortization of the fraction should be applied to the envy method. When the equity ratio is reduced, if it is from the equity method to the cost method, it should be carried forward in full and no longer amortized; If it is from the equity method to the equity method, it should be carried forward proportionally and the balance should be amortized.

2. The concept of long-term equity investment valuation.

The valuation of a long-term equity investment is an assessment of capital. Long-term equity investment can be divided into ** investment and equity investment according to the different ways of investment. Investment refers to the investment behavior realized by the enterprise through purchase and other means to obtain the investment of the invested enterprise; Equity investment refers to the investment behavior in which the investor directly invests cash assets, physical assets or intangible assets in the invested enterprise, obtains the equity of the invested enterprise, and then obtains benefits by controlling the invested enterprise.

Hello, for your question [the situation of improper long-term equity investment evaluation method] or rotten this question for you to make the following answers. There are two accounting methods for long-term equity investments: the equity method and the cost method.

1. The limitations of the equity law are: first, it is contrary to the concept of enterprise legal person in the legal sense. Although the investment enterprise and the investee are a whole from the perspective of economic interests, from a legal point of view, they are still two separate legal entities.

It is impossible for the profits realized by the investee to become the profits of the investment enterprises, and the losses incurred by the investee cannot form the losses of the invested enterprises. It is impossible for an investment enterprise to distribute profits or cash dividends before the investee distributes profits or cash dividends; Second, under the equity method, the timing of the realization of investment income and cash inflow does not coincide, i.e., the investment income is recognized first, and the actual profit or cash dividend is obtained later; Third, accounting is more complicated. Second, the limitations of the cost method are as follows:

First, under the cost method, the long-term equity investment account stays at the investment cost at the time of initial or additional investment, and cannot reflect the equity of the investment enterprise in the investee. Second, when the investment enterprise is able to control the investee or exert significant influence on the investee, the investment enterprise can control the investee's profit distribution policy, or exert significant influence on the investee's profit distribution policy, and the investment enterprise may, by virtue of its control and influence, manipulate the investee's profits or dividends, thus providing conditions for manipulating profits, and its investment income cannot truly reflect the investment income that should be obtained. Consultation Records ·