Exit Mechanism Legal Research Of Private Equity Funds

Private equity fund (PE) is of great importance for our country, it provides important financing channels for small and medium-size enterprises. During the whole operation process of PE, the exit of capitals is quite essential, which decides whether PE will be successful as well as investors’final income. However, PE is an emerging field in our country with a very short development time of about10years, so there are a lot of problems both in market mechanism and legal norms. Especially in the level of legal norms, the existing legal norms can’t meet the requirements of PE. On one hand, the conflicts among legal norms make PE at a loss, on the other hand, regulatory gaps exist in some aspects. So in the background of the continuous development of PE, it is of great significance for the rapid development of China’s small and medium-size enterprises to improve the legal system relating to the exit of PE.The paper analyzes the relevant legal system of the exit of PE and probes into this issue from the following four aspects:The first chapter points out some general theories of the exit of PE. Beginning with the concept of PE, the paper introduces the meaning as well as the importance of the exit of PE. Then it highlights four forms of exit including IPO, mergers and acquisitions and liquidation of share buy-back, elaborating their method of operation and their advantages and disadvantages. These four forms are the basis of this paper.The second chapter of this paper studies foreign legal system of the exit of PE, making the United States and Germany as an example. Choosing these two countries for a comparative analysis is just for they are representative. As the cradle of PE, American capital markets develop more maturely, and its legal system is more perfect, especially that it’s legal system on IPO is worth learning. Similar to China, German financial system is bank-oriented, and its underdeveloped capital markets decide that its main forms of exit are mergers and acquisitions. At last, it summarizes the revelation for China from these two countries’legal system.The third chapter, it first introduces the current situation of the exit of PE in China, then it analyzes the legal obstacles of its system, in perspective of IPO, mergers and acquisitions and liquidation of share buy-back separately. The fourth chapter is the core of this paper; it provides some legal suggestions for the exit of PE based on the proceeding analysis. In this chapter, it puts forward some legal suggestions such as to formulate a specialized legal system of PE, to improve GEM supporting regulatory mechanism and to improve OTC markets and so on.