A Study On Due Diligence Of Private Equity Investment In China

Due diligence is a very important part of private equity investment, and it happens almost in every case. But it's always difficult to understand, analyze and direct due diligence in theory. We have very few researches on due diligence of private equity investment in China.This paper tries to combine the relative practice and theory to find a method of analyzing due diligence of private equity investment in China. First, I conclude the main information asymmetry that exists in PE investment executions in China, with the views of information economics. I think information asymmetry includes disadvantage of financial statements, financial cheat of the company, intangible assets, contingencies and connected transaction.And the paper also use game theory to analyzes the inevitability of information asymmetry to prove the necessity of due diligence. And next, I explain key points of content design of due diligence, by combing the solution of information asymmetry and business management theories. Finally, I try to design a list of due diligence of PE investment in China.