A Study Of Private Equity’s Impact On The Company Performance Of The Companies Listed On GEM

As China’s economy continues to develop and improve, the level of developmentof China’s private equity investment (PE) is deepening. Since the growth enterprisemarket (GEM) was launched on October31,2009in our country, PE has become animportant mean of financing of small and medium-sized enterprises (SMEs), theproportion of the PE participation of the companies listed on GEM has graduallyincreased. Many foreign study results show that the involvement of PE has a substantialpositive effect on the company’s value, performance, etc, and it also helps enterprises tostandardize their governance structure and management capacity. Whether the foreignresearch results consistent with our situation remains to be further studied.This paper combined with Chinese actual situation, using the two methods oftheoretical analysis and empirical analysis researching Private Equity’s impact on thecompany performance of the companies listed on GEM. The theoretical analysis showsthat PE will help improve the company’s operating ability. PE not only provides funds,but also the required investment management, finance, strategic planning and otherservices for the companies. PE can help enterprises establish reasonable goals andrestraint mechanisms, thereby increasing the company’s operating capacity andperformance levels, so PE plays an important role in solving the financing difficultiesand other problems.This paper takes more than400companies listed on the GEM as research samples,60companies which listed on GEM are randomly selected for the study, of which30have PE background, and30have no PE background. Through theoretical analysisconcludes that PE can help improve the company’s operating capacity. This paper usesFactor Analysis and Multiple Regression Analysis to test company profitability, growthcapacity and anti-risk ability of the sample companies to measure the companyperformance. The result shows that the performance of the companies with PEbackground is better than that of those have no PE background, so we can drawconclusions that the PE intervention can improve the company performance. Thedevelopment of PE expands the company’s financing, improving creativity. We can saythat PE is a good way to achieve a win-win for investors and corporate goals.Finally, the paper proposes the outlook of development of Chinese PE. As our PEis still in the development stage, so there are many problems and shortcomings, we must continue to improve the level of PE, exert the advantage of PE to help companiesimprove their performance.