On The Private Equity Fund Capital Exit Mechanism

Private equity funds has become a fashion "hot words" into the economic field,played a huge role in promoting economic development. The investment behavior ofprivate equity funds is a comprehensive management, financing, investment,monitoring, exit the whole process, value-added of its management of capital assetsthrough investment in other business interests. Part of its business, the most criticalpart was undoubtedly its capital exit link. The capital of private equity funds canachieve a smooth decision to pull out its a business success or failure. Therefore, howto analyze their capital out of the system, to improve the system of capital exit ofprivate equity funds, from what angle the purpose of this study. However, the point ofview of private equity exit mechanism and the starting point of a lot of differentangles and entry points and different research methods. In many of the research pointof view and the starting point, the author of property rights-based perspective toresearch and analysis of the capital of private equity funds to exit the system.Private equity fund capital out of the model there are two listed exit and equitytransfer. The two transfer modes there are considerable obstacles to capital factors toachieve a smooth exit. In the listing process, a long time to market, high cost andexpenses listed low listing of the administrative examination and approval by, thelisted rigid legal threshold is high the factors that impede capital listed on the exit ofprivate equity funds. In the transfer of shares to exit the mode, I, M&A exit mode asa case study that the M&A funding constraints, and transaction informationasymmetry, regulators intervention, M&A motivation of participants is the factorsthat hinder the private equity funds to exit through M&A mode.Private equity fund capital out of the process is the process of capitaltransactions, this transaction reflects the transfer of rights. The process of transfer of rights, of course can be applied to the property rights perspective. Exit from theprivate equity fund capital everywhere to reflect the "Property": First, the privateequity fund management capital Jus its management of the property with theproperties of "objects"; Second, private equity funds to exit mode Property ", itswithdrawal from the model in line with the property right of the effectiveness of theexit clause does not affect the effectiveness of the property changes; Finally, theprivate equity fund capital out of the protection system has a" property rights ". Thedesign of the system to follow to avoid the transaction is invalid to the protection ofbona fide third principle, the requirements of public information, publicity and publicconfidence, through the due diligence trading participants’ self-protection, protectionof property rights system design have similarities.Improve the private equity capital out of the system, based on the perspective ofproperty rights, combined with the factors that hinder the private equity fund capitalexit, we should improve the equity alteration registration system improve theinformation disclosure and public system. On the hardware side, it is necessary tofurther regulate the property rights exchange, ensure the safety of the transaction,open and transparent; improve and standardize the tax policy of the private equityfund to ensure the controllability of transaction costs. To achieve self-protection fromthe more professional point of view, private equity funds must use good due diligenceand assistant team, good government relations and public feelings in order to reducethe uncertainty which the transaction.Analysis of private equity fund capital out of the system of property rights-basedperspective, is a macro perspective: This perspective helps us to identify and seize thecapital to exit the key issues and key factors in the process of analysis and study ofthe problem and to find a solution; also contribute to our development perspective,the various elements of the modern "objects" in the change process, and look at theproblem as a whole, dynamic, comprehensive vision, to avoid the legal risk. Ofcourse, we study the trading mechanism of the purposes is to design a more complete,reasonable, effective system to protect the transaction smoothly to achieve, taking into account the efficiency and security. From this perspective, we must relax one’shorizons, to study a variety of trading systems and capital to exit the system frommultiple perspectives, multifaceted, and our transactions more transparent, safe,efficient, reasonable, and to better promote economic development.