Research On The Merger&Acquisition Exit Route For Private Equity Investments

The exit of private equity (PE) investment refers to a process for the investors to withdraw their value-added capital. After the PE investor invests a project company, it can bring some support about technology, management and social relations to the project company, which will increase the project’s value. As the value added, it’s time for the investor to exit from this project company to acquire returns. The exit routes mainly include IPO, M&A, Trade Sale, Buyback, Liquidation, and investors can choose one or more of these routes to withdraw their investment according to the timing and return of the exit. Among all those exit routes, IPO may bring out the highest return and reputation, however, as the listing opportunities become more limited and the listing requirement turn into stricter, difficulties will arise when investors exit through IPO manner. Therefore, it’s inevitable that M&A should be the other main exit route for PE.This thesis principally studies the exit of PE, including the introduction of dominating exit manners and the analysis of factors affecting exit manner choice. By contrasting the exit data between home and abroad, I find that the exit mechanism of PE in developed countries is dominated by trade sale or M&A, the proportion of IPO is very low, but it’s opposite in China. Based on the research of PE exit, this thesis emphatically focuses on M&A exit manner.This thesis is mainly divided into5parts:The1st part is introduction, including the background and significance of the research. The literature review also exists in this part. The2nd part is introducing some information about private equity, such as the relative definitions and developing history. The exit of private equity is mainly discussed in this part, involving the importance, a few routes and some factors about the exit. The3rd part of this thesis is analyzing our country’s exit status, as well as discussing some main reasons for it. The4th part is mainly about the exit route of M&A, which plays an important role of this thesis. I make objective analysis on the advantages&disadvantages of M&A, and the effects brought out by implementing M&A. Procedure of M&A is also discussed from the perspective of sellers, which is practical for PE to exit the investments by M&A. At the end of this part, a typical case is analyzed to support the above content. The5th part of the thesis is about the certain suggestions on how to propel the M&A exit route of private equity in our country.Based on studying many literatures home and abroad, this thesis summarizes and analyzes the relative content about the exit of private equity. Meanwhile, the thesis illustrates our country’s current exit situation, and figures out a few reasons about it. At last, some advices on how to improve the unbalanced situation are provided. The purpose of this thesis is to let the entrepreneurs and PE investors know more about the exit route of M&A, and offer some certain references when implementing this route. At last, I hope this thesis can make a small contribution on breaking the exit imbalance and broadening the exit channels.