An Analysis Of Exit Ways Of Chinese Private Equity Funds

Thanks to its rapid economic growth, China has been attracting more and more attention from overseas private equity funds. Meanwhile, local private equity fund is witnessing an ever stronger growth since 21st century. The establishment of GEM (Growth Enterprise Market) in 2009 is surely to speed up the growth and may even bring an impact to the market. Undoubtedly, private equity fund is playing a more important role on China's financial market nowadays. Though still at the primary stage, China's private equity fund industry has made a notable progress in recent years, which can be seen from the increasing number of private equity fund companies, the ever stronger influence these companies are exerting and a flow of financial talents into this industry.Many scholars have discussed private equity fund in their works and analyzed problems concerning the operating mechanism, the organization forms, and the basic rules, etc. Particularly, the operating mechanism, from fund collecting to investment to exit, is widely studied. This thesis will emphasize on exit, for it plays a crucial role in the whole procedure.Purpose of this thesis is to compare existing exit ways of private equity fund and make suggestion to better China's private equity exit mechanism. To achieve this purpose, following methods will be used:analyzing private equity exit ways from both theory and facts (quantity); analyzing China's private equity exit situation by fact of number based on data from actual cases of China in recent years; taking private equity organizations and venture firms as example, analyzing the factors they consider when choosing a exit way; at the end, concluding the analysis and putting forward suggestions for improving China's private equity exit mechanism.The thesis consists of five parts. The first part is an introduction that explains background of writing this paper and significance of this study. The second part introduces the term and subject to be studied. It defines private equity fund and elaborates the various ways of private equity exit. The third part is a comparison and analysis of different exits ways based on China's data. The fourth part further analyzes the differences by game theory, and cites examples of private equity organizations and venture firms, discusses the different factors they would take into consideration when choosing a exit way, and thus outlines their differences in choosing exit ways. The final part gives a conclusion to different exit ways and, by taking China's reality into account, brings forward a series of suggestions that may help to improve China's private equity exit mechanism.The significances of this paper lie in:finding out reasons and putting forward suggestions to improve China's private equity exit mechanism by studying real cases and latest data; adopting a new way to analyze private equity exit theory, namely comparing the different ways that private equity organizations and venture firms take to exit. However, due to the difficulty of getting data, this paper fails to give a profound quantitative analysis to different exits ways but just outlines the differences from aspects of quantity and income rates. Also, the comparison study between the ways equity organizations and venture firms choose to exit may be considered insufficient too, for it fails to further the qualitative analysis into quantitative analysis and thus build up a format for such difference.