The Research On The Failure Case Of China’s Private Enterprises Backdoor Listing

Since the year of 1979 the reform and opening in China, the economic system has transferred steadily into a market economic system, which regards socialism as the guidance, from planned economy. The change of the system make the leap to the economy of our country’s development. Under the socialist market economic system, our country gradually transit to the flourish of state-owned enterprises and private enterprises from state-owned enterprises independent support,private enterprises play an increasingly important role in economic development. But with the rapid development of our economy, if private enterprises want to occupy the advantageous position in the market, not only have an advantage over competitors in technology, at the same time also need to have solid financial strength as a solid backing in the development of enterprises. The way of private enterprises to raise funds are two kinds commonly, one is using mortgage loan from the bank, the other is issuing shares in the securities market, and each of them has advantages and disadvantages. Because the private enterprises are greatly influenced by the market, risk ability is low, usually in order to control risks, Banks don’t want to borrow a lot of money to private enterprises or only willing to put a small amount of money to the private enterprise, the requirement is the higher loan interest rate than state-owned enterprises at the same time, virtually increasing the cost of the enterprise. So private enterprise need more through the IPO shares to achieve the goal of development to raise enough money.Because in our country capital market the initial public offerings(IPO) is relatively strict audit and more restricted, from application to approval listed need a long cycle and consumes a lot of human resources. Time relatively weak to capital means that the company’s long-term development of private enterprises, this is not acceptable to the private enterprises which want urgent funds for the development. And in capital markets, there are some companies due to mismanagement, loss-making facing delisting risk or has listed qualifications but relatively small company, private enterprise can through a certain way of acquisition of the equity of the listed company to control goals, then their own high-quality assets into listed companies, to ascend the value of the company to complete the purpose of indirect listed successfully raise money. Compared with IPO’ s whole process, backdoor listing’s time is short, consuming less resources. So backdoor listings is one of the best ways to most private enterprises enter the capital market rapidly.This article mainly has a detailed analysis to the behavior of the private enterprises backdoor listings, motivation, listing the risks in the process, through summarizing the domestic foreign studies of backdoor listing related theory and combined with case analysis method, literature review method, standard method analysis to SUZHOU DAFANG case of backdoor listing, by analyzing existing problem in the case, mapping out private enterprises common problems in the process of the backdoor listing, put forward the corresponding improvement methods. This article hope to through the failure case of private enterprises backdoor listings, focus on analysis of the risks in the process of backdoor listings, hopes to have a significant meaning to reduce risk of private enterprises in the backdoor listings under control.