The Risk Management Of Private Equity Financing Of Small And Medium Sized Enterprises Of China

Along with China’s various preferential policies and support, small and medium sized enterprises have the rapid development trend. Although SMEs has been get national level support in the process of development, because of their own reasons, financing and high financing cost have been plaguing the development of SMEs.In the past, SMEs borrowed from bank to obtain the required fund. The premise SMEs need to mortgage asset to get the loans. However SMEs have asset light, coupled with the national tightening monetary policy, the majority SMEs loan rejected by the bank. In recent years, along with the national capital market continues to improve, the financing modes become more. Currently SMEs still finance the money they want from these financing institutions. Private equity financing threshold is low, but also to bring high value-added features, many small and medium-sized enterprises to help solve the financing problems and get growing.As external way financing, PE financing become an effective way to solve the financing difficulties for SMEs.PE does not only provide fund, but also does bring scientific management, capital operation experience, market channels and band effected, etc. Thus enterprise could improve its value in short time through changing corporate governance structure and revenue cost and cost structure.In the private equity financing process, it concludes from conception to final contact negotiations and quit and other areas, certain part of the mistake will be a huge risk to entire financing process even financing failed. Therefore, it is so important to research the risk management in private equity financing.This paper’s main idea is that providing valid measures to avoid risk. Through building risk evaluation index for SMEs who was invested by PE. Evaluating and analyzing the risks from investors, enterprise itself and external environment. This paper also analyzes the risks from XX Chemical Company invested by PE. It helps enterprises to avoid risks through theory and case.