Research On Post-investment Management Of Private Equity

Private equity has experienced more than 20 years of development in China,which is coming into a new stage.By the end of 2016,there are more than 10,000 private equity institutions,managing over 7 trillion RMB which ranked second in the world.Although the private equity enjoys a rapid development,as a result of barbaric growth in early years,and the regulation system is improving incrementally,the PE in China has exposed a lot of issues,restricting the prosperous development of the industry.As a value-added step,post-investment management plays an important role as a connecting link between the preceding and the following,but in the practical work,private equity values “invest” over “post-investment management”.This paper focuses on post-investment of PE,analyzing the current situation and the existing problems of the post-investment of PE and giving feasible suggestion according to the case of Goding Capital investing in U-tour.The main structure of the paper is listing as follows:The first chapter is the introduction of the research background and the research implication.Through a brief summary of opinions from international and domestic scholars,the author found that the external and internal growth environment for Chinese PE is different from aboard,and the research of related areas lag behind the aboard not only in quantity but also in depth.In order to solve practical problems of Chinese PE,it is necessary to extend the research on post-investment management in consideration of the situation of China.The second chapter elaborates the definition of PE and post-investment,classifying post-investment management into 3 parts according to different contents,daily monitoring,exception management and value-added services.Analyzing the importance of post-investment management and factors will influence the outcome of post-investment activities.There are four patterns due to different performers: post-investment management performed by investment team,post-investment management performed by post-investment team,post-investment management performed by both investment team and post-investment team,post-investment management performed by subsidiaries.After briefing of these four patterns,the paper makes a contrastive analysis of those four patterns.The third chapter takes the listing PE/VC company on the National Equities Exchange and Quotations(NEEQ System)by the end of 2016 as the analytical sample,summarizing the patterns choices by Chinese PE/VC institution and the interaction among staff size,place of registry and fund size.After elaborating the history of the post-investment management,the paper summarizes the issues and their cause of formation in post-investment management of Chinese PE industry.The fourth chapter takes the case of Goding Capital investing in U-tour as an example,making a review of Goding's post-investment system,including organization structure,employee selection criteria and the process of post-investment management.Profoundly anatomizing how Goding offer post-investment service for U-tour.Through the lateral comparison and the longitudinal comparison of U-tour's operating performance,this paper shows that diligent post-investment management can make a positive influence on the enterprise's performance.Through the calculation of investment return of Goding capital,this paper shows that the PE/VC who actively participate in post-investment management can achieve better performance on IRR.The last chapter is based on the foregoing discussion,drawing the following conclusions:(1)the selection of post-investment management pattern is highly linked to the scale of PE/VE;(2)post-investment management is tend to be more diligent,professional and systematical;(3)according to diligent post-investment management,the enterprise can achieve better business performance.Finally,based on the findings of this article and hands-on experience,the recommendation for developing Chinese PE post-investment management is offered to strengthen the awareness of post-investment management and make it more diligent,professional and systematical in practical.