The Risk Management Of Private Placement Organization’s Investment In Family Business

With the continuous development of China’s financial environment,the private equity investment model has moved from the United States to China,and many scholars and institutional investors have begun to study and practice this kind of investment method with "abnormal" high returns.But with more and more failures of private equity investment appearing in the capital market,people began to study how to control the risks behind this "abnormal" high return.From the perspective of private equity institutions,they generally focus on the future profitability of the target company and the benefits brought by the withdrawal of private equity funds.Most family-owned companies are start-ups or small and medium-sized companies with poor financing capabilities.Coupled with the chaotic governance structure of family business companies and other problems,banks are reluctant to lend them.Private equity investment can "resolve problems" for these companies.Most private equity investments are equity investments that do not require a company to provide guarantees or make principal and interest payments in the short term.A series of value-added services.However,from some failed cases,risk management technology has not been well applied in private equity investments.Under this background,how to use the theory of risk management to promote the theoretical and practical application of private equity investment to family business investment has become the main research purpose of this article.Based on the above considerations,this paper uses a combination of literature research and case analysis to explore the risk management of private equity investment institutions for family businesses.The literature research method,through reading a large number of Chinese and foreign literature,summarizes classic and cutting-edge theories,and analyzes the limitations of existing theories.Using the viewpoints of information asymmetry theory and stakeholder theory,this paper puts forward the inherent risks of private equity investment and the unique risks of investing in family businesses,and divides the risks into multiple areas.The author of this article tracks,investigates,and analyzes the entire process of due diligence before the investment of Jiuqiang.Combining with the research purpose of this paper,this paper proposes a risk identification and measurement model for private equity investment family companies based on rough set theory.In the case analysis section,this article will analyze how private equity investment institutions perform risk management on the investment activities of target companies through real-world private equity investment cases,and conduct risk scoring through the risk identification methodologies and risk measurement models in the theoretical research section.Summarize the risk response and risk monitoring process after the investment of SAIC Jiuyi and exit from this stage.By analyzing the case of risk management of private equity investment of China Automobile Jiuyi,this article puts forward the following evaluation of the risk management behavior of investment: The main reason for the decision of the investment target of China Automobile Jiuyi is the corporate profit model,and certain financial risks will not affect Investment decisions,but can affect corporate valuations;CAIC’s investment strategy shifts from strategic to financial investments,and exits early through investment agreements.The family company’s corporate governance risk of successfully avoiding the industry risk H of the automobile industry has secured a certain rate of return for investors.For literature research and case studies,this article proposes the following conclusions:using specific technologies to quantify risks can provide decision makers with a good auxiliary role in the investment decision risk measurement process,and even in project investment decisions,but this does not mean that financial analysis or Other due diligence work is not important;the risk scoring model under the rough set method is applicable to this case,and it is simple to calculate and can reasonably calculate the risk score,but its risk measurement effect in other cases still needs to be verified;family heritage issues,On the surface,issues such as strategic decision-making are only internal governance issues of family businesses,but they will directly affect the risk barriers of some processes when private equity institutions invest in family businesses,including bargaining when signing investment agreements,post-investment management work,and fund exits.Points as well as the interests of investors.