1. Initial public offering (IPO)
Initial public offering (IPO) is generally carried out when the investment enterprise is operating in an ideal state. It is one of the best and most popular exit ways for private equity investment funds. It represents the recognition of the company's performance by the capital market and can bring the greatest economic effect to PE and the invested enterprises. Among the exit methods of private equity investment funds, IPO has the greatest value and the highest return, and its return on investment often greatly exceeds expectations. From the perspective of investors, private equity investment funds can convert their non-tradable shares into public shares through listing, and realize investment income through cashing in the market; For the management of the invested enterprise, listing means that the enterprise not only retains its independence, but also obtains the way of continuous financing from the capital market.
2. Internal acquisition of the target company
Internal acquisition of the target company includes company repurchase and transfer of other shareholders or management. Either way, it is to buy back shares from private equity investment funds. Managers and managers of an enterprise usually know the company very well, and they have good management ability. When the enterprise develops to a certain stage, its assets reach a certain scale and its financial position is good, but it has not yet met the requirements of public listing, if the enterprise managers fully believe in the future of the enterprise, in this case, they can withdraw through internal acquisition of the equity held by private equity investment funds.
Internal acquisition of the target company can make the target company buy back the lost equity. This investment method is simple, the investment time is short, and private equity investment funds can withdraw quickly and completely, which is more suitable for relatively small investments.
3. external adjustment? External transfer is mainly manifested in the sale of shares, which is also one of the common exit methods of private equity funds. Private equity investment funds seek capital appreciation by selling shares, including selling shares to unrelated third parties, competitors and other strategic buyers, or transferring them to their private equity investment companies. Selling to an unrelated third party has little impact on the enterprise, and usually the management will not resist or object. However, if the enterprise is sold to a competitor, it will lead to the acquisition of the enterprise by others and the loss of independence. Modern enterprises have gone out of the pattern of pure competition and turned to seek a win-win cooperation mechanism, so strategic mergers and acquisitions are increasingly favored by people, and mergers and acquisitions are expected to become a hot spot for private equity funds to withdraw.
4. Liquidation or bankruptcy
This is the exit path that private equity investment funds have to choose. Once the private equity investment fund finds that it can't realize the expected return, it needs to quit decisively and use the recovered funds for the next investment cycle. Bankruptcy liquidation can ensure the recovery of a certain proportion of investment and reduce the loss of continued operation. According to statistics, the investment recovered by liquidation accounts for about 32% of venture capital funds, and this method can only recover 64% of the original total investment. In addition, bankruptcy liquidation takes a long time, requires complicated legal procedures, and the exit cost is high.
The proportion of different industries in these four exit channels is different. Overall, the repurchase rate is the highest, and M&A (M&; A), followed by public listing (IPO) and mergers and acquisitions (M & amp； A) close. Companies in biotechnology, logistics, medical care, computer-related industries and consumer goods have a high proportion of public offerings (IPOs); Mergers and acquisitions of electronic components, industrial products and health care (M & amp； A) the proportion is high; The proportion of liquidation and bankruptcy of computer enterprises is high; Enterprises in consumer goods, industrial products, energy, electronic components, communications and software industries have a high proportion of repurchase.