The Impact Of Private Equity Investment On The Operating Performance Of Innovative Companies

An innovative enterprise refers to an enterprise that has a continuous innovation mechanism and convert resource elements into innovative performance systematically to obtain sustained and stable competitive advantages.It is the latest form of evolution of mainstream enterprise development models and innovative enterprises are highly regarded in domestic practice and research fields.Innovative enterprises have the characteristics of outstanding performance management and rapid growth before initial public offering.The policy of “everyone contributes to innovation” promotes a new wave of creation.But in recent years,some innovative companies have changed their organizational performance towards the opposite direction after listing,and these phenomena interfere with the healthy and stable development of innovative enterprises seriously.Unlike traditional large-scale enterprises on the mainboard,innovative enterprises are mostly high-tech SMEs.Due to the large amount demand of capital funds,it is important for these enterprises to decide financing channels.In the case of having difficulty in financing from traditional financial institutions such as banks,innovative enterprises have small scales of operation with weak profitability in the early stage of development,and financial indicators do not meet the requirements of IPO listing.Thus private equity funds have become suitable financing channels for innovative enterprises.The difference between this financing method and other channels is that PE not only offer the supply of funds,but also some experienced private equity play the role of certifiers and supervisors in enterprises that optimizing various business performance management of the enterprise,which lead to realizing the value ofthe enterprise at different life stage.The impact of the private equity is of great significance to the performance and market situation of innovative companies,whereas the specific impact mechanism needs further research.In order to figure out the impact approach and degree of private equity funds on the performance outcome of the organization.The paper introduces the development characteristics of private equity investment in China and the situation of innovative enterprise performance first,which explains the research background and research significance.Then the paper summarizes the research outcome on the impact of private equity investment on the performance of innovative enterprises at home and abroad.The theories of the motives and influence paths of private equity investment has been explained,and then the research object of the case would be analyzed and discussed.The paper intends to invest in the CATL by major private equity investment institutions(or partnerships)as an example to further demonstrate and discuss the changes in business performance after the introduction of private placements in CATL in2016,and an in-depth analysis of current private placements Equity investments which may have difficulties to quantify problems and approaches to find solutions.It was found that CATL has broadened the financing resources and channels with private equity proportions,which also has improved the company's capital ownership structure and governance system.But at the same time PE brought risks such as the decline of gross profits,the reduction of inventory operation level and the weakening of equity stability to CATL.All in all,the intrinsic value of CATL has been increased due to the participation of PE.