Research On The Exit Of China's Private Equity Fund

Private equity funds are enterprise that input risk enterprise to produce mature companies, the exit of private equity funds means to sell their production. Whether the process of selling "mature companies" can execute smoothly to accomplish "the skip of capital" Not only consider the achievement of maximum investment profit of upper stage, but also related to the process of re-investment and refinancing. In recent years, some scholars do some reaches on the timing and way of private equity exit, but, generally speaking, these studies need to be expanded from the depth and breadth. Scholars reached the problem of exit timing from the perspective of asymmetric information, but which can not explain all of the exit homeomorphism, actually, information asymmetry and other factors influence the choice of exit timing through the process of pursuing the maximum return of private equity funds. So if we want to explain all phenomenon of exit timing, we must set up a proper revenue function of exit.Scholars reached the problem of exit mode by comparing the exit performance of different mode to analysis the advantage and disadvantage of them and give some suggestions to the realistic choice of exit mode. But from the view of reality choice, in addition to the rigid requirements of the different exit, all of the countries and regions during different period not only to show the preferences of different exit ways, more importantly different exit mode coexistence at the same time. Therefore, the advantages and disadvantages are not absolute, but relative. Private equity funds should choose the right exit mode in which can maximize the exit revenue according to the characteristics of all venture firms and the external environment.Accordingly, on the one hand, we establish revenue function of private equity fund and analysis the principle of mechanism of optimal exit timing, we also analyze the influence of a variety of factors to optimal exit timing and do some empirical analysis; on the other hand, In this paper, we analyze Corresponding selection theory of exit mode of private equity funds and formulate the impact of Enterprise Value on the exit options. Though the theoretical and empirical research, we get some significant conclusions as follows:Firstly, the factors that influence the choice of exit time include the private equity funds and its manager, the enterpriser, the characteristic of Venture Firm, the business cycle of industry of private equity funds and invested industry and macro economy environment, which influence the exit time from the way of asymmetric information and the scarcity of resource.Secondly, some experimental evidence show that the phenomenon of early exit of private, equity funds, more early exit of young private equity funds and the accelerating exit for the reason of technology shocks exist not only in American but in china. We can not explain all of these from the respective of information asymmetry, we should the fundamental factor is scarcity of resource. We set up a model to show that the scarcity of resource influence the behavior of private equity funds and the enterpriser. The more scarcity the resources is, the much longer the private equity funds holds the venture project. The interest rate is the price of capital, which regulate the degree of scarcity of venture capital and have a great influence to the exit structure of private equity fund industry.Thirdly, we constructed a factor system of influencing selection of exit mode. This system considers the subjective utility as a standard, including a side benefit of exit, the situation of enterprise after exit, the Corporate Governance of enterprise after exit, the way of pricing, the mode of pricing, the structure of market, search cost, agent cost, opportunity cost, market risk, liquidity risk, entrepreneurs risk and price risk. Some factors, called exogenous factors, have no relationship to the venture firm, which are the fundamental reasons of different exit structure in different country. Meanwhile some factors, called endogenous factors, change due to the actual situation of enterprises. The governance value which comes from excitation effect of stock option is the most important endogenous factors. The governance value is directly proportional with the enterprise size and Shares held by enterpriser, which is benefit to explain the High-yield-related phenomenon of exit listed exit.The empirical results also confirmed the theoretical reasoning.Lastly, macroeconomic environment has a great impact on private equity exit, the way of impact is resource scarcity.Through research, we give some suggestion to the problem of acceleration of exit, asymmetric information in the exit process, exit options as well as the exit timing and options of enterprises.