The difference between M&A fund and private equity fund
Generally speaking, M&A fund is a branch of private equity investment fund. Private equity investment refers to a form of investment that raises capital in a non-public way and invests in enterprise equity. Compared with seed stage, initial stage, expansion stage and Pre-IPO stage, private equity investment funds can be divided into angel funds, venture capital funds, growth funds and Pre-IPO funds. The investment in mature period and recession period of enterprises is mainly completed by M&A fund.
However, in foreign capital markets, private equity funds mainly refer to merger and acquisition funds, and the corresponding word is venture capital funds; In the domestic capital market, private equity investment funds mainly refer to the funds invested in the Pre-IPO stage. The main reason for the difference in the connotation of private equity investment funds is that private equity investment funds are not a suitable standard for classifying various investment funds. The characteristic of private equity investment is financing mode, while M&A fund emphasizes trading mode.
From the development history of private equity investment funds, private equity funds originated from M&A funds. Before 1990s, leveraged buyout was a typical trading mode adopted by M&A funds, namely leveraged buyout. Leveraged buyout reached its peak in 1980s and 1990s, then gradually shrank with the collapse of junk bond market, and then recovered in 2 1 century. (Source: Yi Yin. Com huangyou bridge)
M&A Fund Investment Guidelines
The operation of M&A fund is a complicated process. From the raising and establishment of funds to the implementation of M&A, project management, dividend distribution and withdrawal from liquidation, problems in a certain link will make investors face losses. Therefore, M&A funds should pay special attention to risk control in the process of productization, especially how to realize safe exit, pay attention to the choice of exit mode and opportunity, and make a perfect exit plan.
According to the division of responsibilities between LP and GP, the role of LP is only responsible for capital contribution and not participating in investment management activities. Excessive intervention by LP to GP may reduce the efficiency of fund operation, and GP may abuse its power to infringe upon LP's interests. For example, when GP manages both Fund A and Fund B, Fund A may purchase the projects invested by Fund B to realize the withdrawal of Fund B, or misappropriate the funds of Fund A to alleviate the shortage of funds of Fund B..