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What is the risk control process of private equity funds?
Project selection risk and its control

Project selection is the basis and premise of project investment. Only by obtaining high-quality projects can the subsequent investment management process be meaningful. Project selection is very important for project investment, which requires that project selection must be strictly controlled, and projects should be screened according to investment industry standards, regional standards and project standards, and projects that do not meet the requirements should be resolutely rejected.

First of all, is there sufficient market capacity for the market potential of the project? Can it continue to grow at a high speed? Is the industry average rate of return high?

Secondly, does the core competitiveness of the project product or service have exclusivity, anti-counterfeiting ability (barrier) and strong profitability in some aspects?

Thirdly, manage the overall quality of the team, including whether the team members are competent for their jobs, integrity management, unity and cooperation.

Finally, the legitimacy, feasibility and scale of the project. That is, whether the business procedures and certificates of the invested enterprise are complete, whether the expected rate of return of PE business can be achieved, and whether the investment quota of the selected project is appropriate. If the project is too big, it will not only exceed the investment quota and affordability of PE, but also contain greater investment risks. If the project investment is too small, it will not only lead to economies of scale, but also distract the project manager's time and energy.