A Study On The Retreating Mechanism Of Venture Capital

It's an exploring task to research the retreating mechanism of venture capital (RMVC) under the circumstances of international economy and capital market. The retreating mechanism of venture capital plays a vital role in the final success of VC, as all necessities should be established to insure the success of VC, among which creating effective retreating path of the key point. Therefore, establishing and perfecting the RMVC to provide necessary financial support for the setup and growth innovation high-tech enterprises appears imperative to the development of China's capital market. This thesis firstly studies traditional RMVC, and then based on international comparisons puts forwards a rode suitable for China's high-tech enterprises of small-and-medium sizes. Namely, VC can retreat from capital market through restructuring issuing, which constitutes an example for designing VC and its retreating mechanism. The article divided into four parts: Summary on VC and RMVC, Traditional RMVC, International Comparisons and references, Innovation of RMVC: Restructuring Issuing.The first part is Summary on VC and RMVC. This part briefs basic concepts and features of VC, enumerates known concepts about VC at home and abroad, analyses the relationship between VC and venture enterprises. And consequently, concludes the basic mechanism of RMVC: after the venture enterprises grow mature, VC institutions transform its investment from the state of ownership into cash. That is liquidation mechanism as well as relevant corresponding institutional arrangement. RMVC doesn't only provide continuous liquidity, but also present sustainability for VC. Thus, how to devise a mechanism to both insure the retreating of capital and make sure that enterprises still possess enough capital for development seems extremely important.The second part is about traditional RMVC. This part elaborates four approaches to retreating for VC:IPO in the second-board market, stock repurchase of venture enterprises or enterprisers, M&A of venture enterprises or enterprisers and liquidation of venture enterprisers. In details: (1) Through analyzing the principle of IPO. The development situation of second-board market, and the process off listing in second-board market like NASDAQ, the article concludes IPO is the results undertakers and venture capitalists dream of, and the best retreating manner, which second-board market becomes the best issuing place for venture enterprises. (2) Briefing major ways for stock repurchase, listing 5 approaches to determining the prices of storks, and comparing the weakness and strength of these approaches. We believe that the price ofstocks is decided by some economic indicator by venture capitalists and repurchase persons in the form of agreement beforehand. As a result, when venture enterprises don't perform well, stock repurchase is a backup retreating manner to most venture capitalists. (3) Mergers and acquisitions of venture enterprises forms the key point of this part. Through elaborating the process of M&A of venture enterprises, the content of evaluating venture enterprises, and comparing ways to evaluate venture enterprises, and major payment approaches to M&A of venture enterprises, the article concludes: Through M&A of venture enterprises, not only venture capitalists can reclaim investment to retreat from venture enterprises, but also undertakers can take back their investment and realize high profits from startup investment. (4) Through the game to continue venture enterprises or not, the liquidation of venture enterprisers turns to be the best way to reduce losses when venture enterprises go bankrupt.The third part is international comparisons and references of RMVC. Through analyzing and comparing the relatively practices worldwide of four major retreating channels for VC, briefly analyzing the status quo RMVC in China. At first glance, the VC in China can also retreat through listing, M&A, repurchase, liquidation. But as a matter of fact, these manners lack legal applicability and workability in...