Mechanism Legal Problems Of Private Equity Funds To Exit

Private Equity Fund (PE fund) is widely regarded as the most successfulfinancial innovation in the20thCentury, whose prosperity fosters thegrowth of enterprises in their start-up stage, the restructure ofindustry as well as the innovation of investment and financing method.The exit of capital is the pivot in PE funds operation. It can beperformed through four channels, including the invested entity’s initialpublic offerings (IPO), mergers&acquisitions (M&A), share buy-back andwrite-off. Exit through IPO, however, is considered the most profitableand ideal exit method for PE funds.For so long, the deficiencies in China’s capital market structure andrelated legal system have impeded PE fund’s exit and substantialityhindered its re-investment and re-fundraising. This thesis intends toanalysis this exit mechanism in China from perspectives of the multi-level capital markets and legal system regarding to the four exitroutines, with particular attention to the obstructive factors withinthem. Meanwhile, the thesis takes the US, who has the most mature capitalmarket, as the object of comparative study, reviews and discusses itspractice of PE exit, and basing on that proposes suggestions to improvePE exit mechanism in China.The thesis majorly adopts the methods of comparative study and empiricalstudy, with particularly stress on the combination of legal analysis withresearch data and actuality observation, so as to enhance theconclusion’s validity for reference. Additionally, the thesis weighs thetimeliness of the research. As some of the significant policy adjustmentsand legislation are carried out in the latter half of2013, much contentdiscussed in this thesis are not involved in earlier studies. Also,frontier developments in PE industry, including private investment inpublic equity (PIPE) and secondary PE market are encompassed.