Study On Private Equity Investment Risk Avoiding

Private equity as an equity capital is a way to invest in business at different stages of the lifecycle and then exit from the business after gain a profit from the investment. Private equity has a significant means to promoting the development of small and medium enterprises, the restructuring the ownership of business, the restructuring the assets of enterprise, the transformation of the enterprise and so on. As the private equity itself has non-transparent, non-liquid characteristics, it faces many endogenetic and exogenous risks in the operation process. The risk management and avoiding is the important issue in the study of private equity.A fuzzy selection model is established to avoid the risk in the choice of private equity syndication' partners in the single private equity stage at first. Cost, reputation, organization consistent and resource complementary are considered in the model, the maximum return and minimum risk as the model's objective respectively. The risk subjection objective weight optimum return subjection model is established and the optimum candidate is educed in risk weight. Base on this single investment stage model, use dynamic programming methods to establish a multi-stage's syndication candidate alternative risk model to elusion the risk. Get the multi-stage syndication candidate alternative maximum solution.Use option-game model and methods described the two stage private equity investment's risk and expects return in mathematic model under uncertainty. It established private equity option decision-making model to analyses the option value. Base on the option decision-making model, the information asymmetry between private equity firm and portfolio companies are analysis, the game between private equity firm and portfolio companies is come down to with incomplete information and dynamic game: signal game. A solution of combination perfect Bayesian equilibrium is represented.The principal-agent problem in private equity is studied theoretically. A principal-agent risk avoid game model is established to analyses the agent problem use game theory between private equity firm and portfolio companies without the capability restriction of both fund manager and portfolio entrepreneur at first, and then the capability restriction of both fund manager and portfolio entrepreneur are considered in the model. The perfect Bayesian equilibrium is educed. In case of game equilibrium, the increase in the ratio if entrepreneurs can mane the effort cost reduced and thus stimulates the entrepreneurs pay out effort. The private equity firm can control the portfolio companies at lower cost in this case. Contrariwise, there is higher control cost. The income of private equity firm is a minus function about entrepreneurs' risk adverse degree. The lower the degree of risk aversion of entrepreneurs will lead to the higher the income of the private equity firm.Analyses the exit risk bring to exit process in different exit degree, type and occasion. Analysis the risk about exit human resourse, executeive management, timing, exit costs, propagandaize, and hire consultants in the implementation of exit processs and come down the risk influence factors to exit return ratio, exit cost, exit degree, liquidity of exit return, the relative employee's attitude and exit environment six main aspect. 18 sub-indicate are used to valuate the six risk aspect of exit. A gray relevance evaluation model which with a risk weighted exit return as general objective is established and the optimum exit selection order base on the risk weighted exit return is represented.