Legal Research On The Exit Of Private Equity Funds Via IPO

Private equity fund refers to that one who invests the unlisted enterprises via the form of private equity. When there is the right time, the investors quit the invested enterprise. In the process of the whole investment, the investors involve in the management of the enterprise. The investors not only share investment income, but also bear investment risk.Private equity fund must make a reasonable balance according to the changes of the market to obtain ideal income. Then developing a flexible exit strategy and choosing an appropriate way of exit timing is very important for private equity funds. There are three main kinds of common exit ways initial public offering (IPO); the stake sale; bankruptcy and liquidation.IPO is the perfect way to exit. In this way, the investment institutions always obtain high earnings and the invested enterprise can lay a foundation for the sustainable development. But this way of exit still has many defects. First of all, the cost is very high and the procedure is tedious. Second, before the invested enterprise to prepare to public offering, it must make public in the company’s operating and financial conditions and so on. This is a challenge for the competitiveness of the enterprise itself. At last, after the initial public offering, if private equity funds can not immediately withdraw from the investment enterprises, it would take the risk that gains can’t be perform or delay to perform.In view of the above defects, this paper points out the barrier of the private equity fund exit via IPO in our country and put forward to build a second board market and so on. Draw lessons from the USA, we should develop a multi-level capital market and expand the exit path of private equity funds, improve the exit mechanism.