The Research on the Exit Legal System of Private Equity Funds
|Keywords||Private Equity Funds Exit IPO M&A Buyback Write-off|
Currently, Private Equity Funds has become the important force which leads the development of China’s capital market. As a kind of special financing tool, Private Equity Funds has strong adaptability and greater operational flexibility in solving enterprise financing problems. It can make investors’funds be used more effectively and value-added. Furthermore, the sustainable development of China Capital Markets could be significantly promoted and the construction of Multi-level capital market process could be accelerated. The cases that realize leap develops with the help of private equity funds is too numerous to mention one by one, such as Ctrip.com, Mengniu, Alibaba, New Oriental and Goodbaby.But within private equity funds operating mechanism, exit strategy is the most important stage in the whole link. In a manner of speaking, whether the private equity investors can withdraw from target firm successfully determine the ultimate results of the project success. Their perfect capital market environments and the characteristics as the financing industry and even the entire capital market powerful thrusting agent are two crucial factors of what makes Private equity funds become the capital markets darling in developed countries. Normally, the private-equity industry which exit mechanism is perfect is well-developed and also can boost the development of economy. Because exit mechanism concerns the whole private industry, finding and solving private equity funds exit mechanism problems are particularly important. However, at present local PE exit mechanism is not so perfect, and there are many institutional obstacles. It is in this context that the author attempts to absorb and draw lessons from foreign advanced capital markets especially the successful experience of United States, based on the analyses of the status of local private equity funds exit mechanism problems. Finally the author raises some corresponding countermeasures hoping to do some bit for the perfection of local private equity funds exit mechanism. This paper is divided into four parts:The first part introduces the basic concept and private equity funds operation procedure, clarifying the concept of private-equity funds and expounding the significance of exit mechanism in the PE investment process. There are four main exit strategies:IPO, Mergers and Acquisitions, Buy-back, Write-off. Furthermore, the author presents us the advantages and disadvantages of the four strategies.The second part takes a close look into American private equity funds corresponding exit legal system. The paper conducts a comparative study for American established typical exit system around the world. American market-oriented financial system mainly offers enterprise the funds needed through direct investment. American PE exit legal system is perfect benefiting from its advanced capital market. The main exit strategy is IPO and M&A. This section also briefly introduces American Buybacks and liquidation system.The third part attempts to illustrate institution barriers in local four exit mechanism. The common issue that four exit path show us is that our country has not yet established multi-level capital market system.The fourth part expounds some suggestions upon the overview of our PE exit system obstacles as mentioned above, drawing upon the fruits of American. Therefore, to establish multi-level PE exit mechanism is a matter of great urgent.