The Study On The Effect Of Private Equity Investment On The Growth Of Family Business

Private equity investment is one of the most important ways of financing besides bank lending,debt financing and IPO.The rise of private equity investment in foreign countries has laid the foundation for the development of private equity funds in China since 1990 s.Private equity fund in China has experienced from the germination,development,maturity,shuffle stages to the stage of the orderly development at present.Now it plays an important role in providing finance of lots of firms.Small firms in our country mostly exist in the form of family business.The so-called family business refers to a kind of corporate organization that it starts from family business and corporate assets and shares is mainly controlled by a family that has an important impact on the management of corporate.The embryonic form of family business started from the 1970 s and up to now,it has become an indispensable part of China's economics.Many relevant studies at home and abroad come to a conclusion that the intervention of private equity investment has a certain effect on the growth of the enterprise and the intervention of private equity investment can accelerate the IPO process of enterprise.On this basis,the relevant studies show that the different nature of private equity investment institutions have different effects on the growth of enterprises.Combined with the important position of family business in the economics and the research on the growth of private equity investment institutions,this paper studies the effect that private equity investment has on the growth of family business.This paper focuses on the 794 enterprises in the IPO listing Corporation from 2008 to 2011 with the exception of the financial industry,the missing data and the data value are excluded.Through the company's ownership structure,643 family firms are selected.The paper found that the involvement of private equity investment institutions does promote the growth of business before IPO,especially in family business.In addition,the growth of both firms with PE investment and those without PE investment was greatly improved.Further study finds that the growth of the second year after IPO is higher than that of the IPO year while the growth of the third year after IPO is lower than that of the second year.On the other hand,family enterprises with state-owned private equity background shows higher growth than those without state-owned private equity background.Family enterprises with overseas PE and those without overseas PE shows no significant difference in aspects of growth.Family enterprises with PE investment with richer experience shows higher growth than those with PE investment with less experience.After the private equity exit,the difference of growth is getting narrower than that before IPO and there is no difference in growth of this two kinds of firms.Through the summary and empirical analysis of this study,the relationship between private equity investment institutions and growth is enriched.In order to better realize the effect that the private equity investment have on the enterprise growth,this paper finally raises the suggestions from the angles of the private equity market and the business so that it can promote the process of enterprise development.