Risk Control Strategy Of YT Company Investment X Co.

Private Equity investment(PE Investment) is refers to the equity investment in unlisted companies, mainly through listing, mergers and acquisitions, buy back and other ways to profit from. Under the current financial system based bank, PE investment will help solve some small enterprises’ problems of financing difficulties, to achieve a more rational allocation of resources. With the rapid development of the national economy, the capital market is booming.After Growth Enterprise Market(GEM) started, PE investment has developed rapidly, while the gem attract a large number of capital to enter PE investment. The company I work for also increased the amount of PE investment in 2010.With China’s stock market continue to regulate and rational,the stock’s Price Earning Ratio continued to fall and the rate of return on PE investment is declining. Excessive influx of funds pushed up the cost of PE investment while Individual enterprises lure investment institutions enter on a high price with stories、 fictitious performance and other means. The lack of an effective risk assessment and control of investment projects during the Private Equity investment may lead to investment failure and a huge loss. Therefore, it is very necessary to study the risk control strategy of PE investment.Although there are many theories and practices of equity investment in China, but there is a lack of research on how to invest, value assessment methods, risk assessment and control strategies. YT company is also facing inadequate research, research data moisture, lack of risk tips, lack of wind control measures and other issues in the development of investment business. The company is facing how to systematically assess the risk, control risk, and to coordinate the interests between the investor and the actual controller, etc., especially in early project, therefore, the company needs to systematically study the relevant theory and practice.First this paper introduces the development background and history, investment process, project risk assessment and control measures of YT company’s equity investment. Second, take the process of YT investment X company as an example, the author introduces the business situation, X company team situation, financial situation, industry, financing and listing plans, and systematic analysis. This paper focuses on the investment process, research points, financial analysis points, valuation methods, the design of the transaction structure in the current environment, and research on the risk points and control strategies in investment survey, decision-making and follow-up management are studied.The analysis process will provide reference and operational risk identification, analysis, evaluation, the control’ s theoretical guidance and coping strategies for PE investment institutions. It is very valuable for YT company to improve its PE investment risk control system and the formation of effective risk control strategy, while it also be meaningful for PE investment institutions to provide guidance and reference to the risk management practices.