Research On Private Equity Financing Path Of AY Company

Since the reform and opening up, china’s private enterprises in our country playan important role in national economic development and economic restructuring. withthe accelerated pace of urbanization and the county to encourage the development ofprivate economy policy opportunity, private enterprises ushered in a new era. But atthe same time, also need to face and solve all kinds of problems, including thefinancing issue related to the survival and development of private enterprises. Privateenterprises and state–owned enterprises compared to the indirect financing throughbanks don’t have the competitive advantages, through direct financing from capitalmarkets, whether the issuance of bonds or IPO, Variety of restrictions is standing inthe way of private enterprises. The financing issue of private enterprises has been apressing problem. It is worth to research on financing path to solve the problem.Private equity funds (PE) funds from America, in recent years, Asia especiallyChina the PE market experienced a period of rapid development, the investment andscale increasing. The region extended from the coast to the mainland. The focus ofinvestment is from the state-owned enterprises to private enterprises, to a morediversified. High-quality domestic the three or four line of the city’s investmentenvironment and private enterprises accelerate the pace of PE investment. Comparingwith financing in the stock market and making loans by banks, the qualification limitof once average financing size for PE is lower than others, resulting in a greatattraction to private enterprises. The successful of such big bands like Mengniu, Sinaect are linked to PE. If this means that the PE is better to private enterprises? Butsome private enterprises go bankrupt like Taizinai and some acquired by their competitors like Nanfu and Yongle. We can see the PE is a complex process ofcapital operation. The financing path includes the model design, negotiations to sign,exit and many other links. Each link has risk and the possibility of failure. Thereforeit is of great significance to strengthen study of PE financing path in order to controlthe risk and capital.A private enterprise in this study of AY company is in such a background of thegrowth and development, as a national agricultural industrialization leading enterprise,in the progress of growth and development it also encountered financing problems.Therefore AY company introduced a foreign private equity investment fund. Throughthis made up for the financing gap. AY Company obtained a stable source of fundsand improved the internal management level, and completed the transformation ofjoint-stock enterprise, and established a modern enterprise system. but because oflacking the experience for PE financing path design, management and control, the PEfinancing path appeared a long cycle, poor financing efficiency, high financing cost,the agreement on gambling caused the financing risk. Does the AY Company PEfinancing path have the effectiveness? The innovation of this paper is using theSWOT analysis to prove, analyzing its strengths, weaknesses, opportunities and treats.The contribution of this article lies in analysis of PE financing path to find its causes,and the use of project management theory to optimize the path. It must have guidingsignificance to the practice work.