What are the main exit methods of private equity investment projects?
1, IPO exit
Initial public offering (IPO) refers to the initial public offering of shares to an unspecified public when the invested enterprise reaches a certain scale. The listing of enterprises has obtained the way of financing in the capital market. Generally speaking, IPO is the most ideal exit method for investment institutions. For investment institutions, IPO can convert non-tradable shares held by private equity funds into shares that can be listed and circulated.
2. Withdrawal of equity transfer
Equity transfer is another important exit method for investment institutions besides IPO. Equity transfer refers to a way for an investment institution to transfer its shareholders' rights and interests to others with compensation according to law and withdraw cash. Common such as private agreement transfer, public listing transfer in regional equity exchange center, etc. M&A and repurchase also belong to equity transfer. In addition, if the investment period of private equity fund expires, or it is necessary to realize the income for some reason, the equity investment institution may transfer its shares to another private equity investment company in order to withdraw.
3.M&A Exit (Horse)
M&A refers to the private equity investment fund transferring the equity of the target enterprise to a third party when the time is ripe to ensure the smooth withdrawal of the invested funds. As an important way of the final capital withdrawal of private equity investment, in fact, the management of private equity funds and target companies think that the value of the enterprise has reached the target expectation, and promote the enterprise as a product and sell it to other PE or another company.
4. Withdraw from repurchase
Repurchase is mainly divided into management buyouts and shareholder buybacks. Share repurchase refers to the behavior of a startup enterprise or its management to buy back shares from an equity investment institution through securities such as cash and bills, so as to facilitate the withdrawal of the equity investment institution. When the enterprise develops to a certain extent, the asset scale, product sales and financial status are good, but it does not meet the requirements of public listing, the management is optimistic about the future potential of the enterprise. Considering that mergers and acquisitions may lead to the loss of enterprise independence, in this case, the management can buy back the equity held by private equity investment funds and make them withdraw.
5. Withdraw from bankruptcy liquidation
In practice, many investment projects can't realize the expected income, or investment institutions think that enterprises have lost the possibility of development or the growth rate is too slow and the income is too low, and even investment projects may fail and face bankruptcy. In this case, bankruptcy liquidation becomes the last resort to withdraw funds from equity projects.
6, backdoor listing exit
The so-called backdoor listing means that some non-listed companies acquire some listed companies with poor performance and weakened financing ability, divest the assets of the acquired companies and inject their own assets, thus achieving indirect listing. Institutions can use their own resources to help the invested companies find suitable shells and cash them in the secondary market after listing.
7. Exit of the New Third Board
The full name of the New Third Board is the national share transfer system for small and medium-sized enterprises. It is an important part of China's multi-level capital market and the third national stock exchange after Shanghai Stock Exchange and Shenzhen Stock Exchange. Compared with other exit methods, the New Third Board has the following advantages:
1, the new third board market has a relatively high degree of marketization and is developing very fast.
2. The mechanism of the new third board market is more flexible and relaxed than that of the main board market.
3. Compared with the main board, the listing conditions of the New Third Board are relaxed, the listing time is short and the listing cost is low.
4. Strong support from national policies.
The above is the introduction of the exit mode of private equity funds, hoping to help everyone.