Discussion on the Exit of Private Equity - A Case Study of IPO

Abstract

Private Equity (Private Equity, abbreviated as PE) is to adapt to the market economy, facing numerous opportunities for investment opportunities, making up for the limitations of the traditional financing channels in terms of the scale of financing to meet the needs of enterprise development, and gradually developed as a mode of investment and financing from the financial market. This article will talk about my several immature ideas according to private equity investment. Index Terms - private equity, IPO policy At this stage, with the rapid development of China's economy, the depth and breadth of investment may expand, the number and size of companies have taken advantage of the continuous development, faced with such developments, the traditional financing companies both in the breadth and depth of financing will be subject to certain restrictions, in such opportunities, private equity investments gradually assume an increasingly important role in the development of market economy . Here we simply learn about the concepts of private equity investment: A. Private Equity-Related Concepts Private equity (PE) refers to equity investments to non- listed companies through the private equity fund. During the course of transaction, PE comes to consider the future exit mechanism, namely through the company's initial public offering (IPO), mergers and acquisitions (M&A) or management buy-outs (MBO) and other ways to exit a profit. Simply speaking, PE is the PE investors looking for good fast- growing unlisted firms, capital injection, get a certain percentage of its shares, and promote the company's development, then profit form the transfer of ownership. 1) General Private Equity: It points to specific investors to raise funds in private for non-listed companies, including in the seed, start-up stage, expansion, maturity or Pre-IPO of enterprise for equity investment, and then through a variety of methods making the invested enterprise to develop and realize the equity of value-added and consider the future of the special exit mechanism during the course of transaction, eventually profit form selling the holding shares. 2) Narrow Private Equity: It points to specific investors to raise funds in private on the already formed a certain scale and generate stable cash flow to develop and mature business investment, and to consider the future of the special exit mechanism during the course of transaction, eventually profit form selling the holding shares. We based on general private equity investment as a background for discussion.