The Risk Management Of "PE + Listed Company" M&A Fund

As China's economic growth rate has gradually slowed down in recent years,many listed companies achieved transformation and upgrading through mergers and acquisitions.In this context,M&A funds have grown rapidly.M&A funds are divided into PE dominant M&A funds in the mature market of Europe and America and PE shareholding M&A funds in China's market.Among them,"PE listed Company" model is one of the mainstream M&A funds in China.Paradise Dakang is the earliest industrial M&A fund established in China based on "PE + listed company" M&A model.This model is rapidly recognized and emulated in the capital market with its many advantages,but also frequently controversial.At the end of 2015,Dakang received a lawsuit from Silicon Valley Paradise,which asked them to fulfill its acquisition commitment and pay the project money and interest losses.When it was announced,the new model of M&A fund was once again at the forefront.Due to the imperfect supervision system and the immature new model make the M&A funds under this model face greater and more complex risks.If there is no effective identification and prevention of risks,the merger and acquisition activities of listed companies are likely to end in failure.This article selects Paradise Dakang as an example to comprehensively review its business processes.Based on the methods of literature analysis,case analysis and questionnaire survey,the paper first establishes the risk identification framework based on the external environment and business process of M&A fund of "PE listed company".By comparing the two modes of M&A fund in the four stages of management,further identifies and analyzes the risks faced by Heavenly Da Kang,and finds that the risk is mainly manifested in the dual principal-agent relationship brought by inconsistent interests.Integration risk caused by different management enthusiasm,exit risk caused by single exit channel and default of listed company,etc.Secondly,the identified risk is scored by questionnaire survey.These risks are reclassified according to their nature,and risk evaluation model is established by using AHP.The weight of each risk element is determined according to the expert scoring situation,through calculation,the legal risk,the integrate risk,and the risk of exit is found more prominent.Finally put forward targeted recommendations for the identified risks,such as perfecting legislation and supervision mechanism,strengthening information disclosure,establishing incentive mechanism,enriching exit channels and so on.This research is helpful to provide decision support for the risk management of M&A fund of PE listed company in China,which has certain practical significance.