What are the ways to exit equity?

First of all, equity exit refers to the process in which equity investment institutions or individuals sell their equity capital on the market to recover their investment and realize investment returns after the entrepreneurial enterprises they invest in have developed relatively maturely. , exit is also the ultimate goal of equity investment, and it is an important reference for judging the profitability indicators of an investment institution.

Common equity exit methods are:

1. IPO? :? Investors’ favorite exit method

IPO, initial public offering of stocks (Initial Public Offering) Offering), also commonly referred to as listing, refers to the way in which private equity investment funds are added to the value and exited by listing on the securities market after the company has matured. Enterprise listings are mainly divided into domestic listings and overseas listings. Domestic listings are mainly Refers to listing on the Shenzhen Stock Exchange or Shanghai Stock Exchange. Common overseas listings include the Hong Kong Stock Exchange, the New York Stock Exchange and the Nasdaq.

With the leverage of the securities market, after the IPO, investment institutions can sell the stocks they hold and obtain high profits. For enterprises, in addition to the appreciation of the company's stock, more importantly, the capital market's recognition of the company's good operating performance can enable the company to obtain funds for further development in the securities market.

2. Exit through mergers and acquisitions: the most important exit method in the future

Mergers and acquisitions means that an enterprise or enterprise group affects and controls other enterprises by purchasing all or part of the equity and assets of other enterprises. For business management, M&A is mainly divided into forward M&A and reverse M&A. Forward M&A refers to combining the consideration of both parties in order to promote the continuous and rapid increase of corporate value, and the investment institution continues to hold or directly exit after the shares are diluted; reverse M&A Mergers and acquisitions are directly aimed at exiting investment, which is a subjective act to realize investment returns. According to the current situation, some mergers and acquisitions are a last resort.

The complete company M&A process should include three major stages: M&A preparation stage, M&A implementation stage, and M&A integration stage.

3. Exit from the New Third Board: the once most popular exit method

The full name of the New Third Board? "National Equities Exchange and Quotations" is an important component of my country's multi-level capital market. It is the third national securities trading venue after the Shanghai Stock Exchange and Shenzhen Stock Exchange. Due to the lower entry barriers of the New Third Board compared to the main board and its flexible agreement transfer and market-making transfer system, exits can be achieved faster. It was once a favored exit method by the capital market. However, as the popularity of the New Third Board has declined, In addition, its lack of liquidity and other shortcomings have not been effectively improved, and equity exit through the New Third Board has become a thing of the past.

The transfer methods of the New OTC Market include market-making transfer and agreement transfer. Agreement transfer means that under the auspices of the stock transfer system, buyers and sellers reach equity transactions through negotiation; market-making transfer means adding an intermediary between the buyers and sellers? "Market Maker".

4. Backdoor listing: the most alternative IPO exit

The so-called backdoor listing means that some unlisted companies acquire some listed companies with poor performance and weakened financing capabilities, and then divest the acquired companies. Company assets, injecting own assets, thereby achieving indirect listing operations.

Compared with companies that are waiting in line for IPO, the average time for backdoor transactions is greatly reduced. If all qualifications are qualified, the entire approval process can be completed within half a year, and the cost of backdoor transactions is also reduced. Huge legal fees, and there is no need to disclose the company's indicators.

5. Equity transfer: the exit method with the highest efficiency and success rate

Equity transfer refers to an investment institution that transfers its shareholder rights to others for a fee in accordance with the law and cashes out. Way. Common examples include private agreement transfers, public listing transfers in regional equity trading centers, etc.

Equity transfers not only happen to some leading companies and quasi-listed companies, but also to other companies that are still some time away from listing and exiting. Industry insiders pointed out that on the one hand, a large number of listing failures have affected investor confidence; on the other hand, many funds are not optimistic about the current IPO situation, and the funds are approaching the exit time point. Therefore, the exit method of equity transfer has attracted more and more attention from investment institutions this year, showing a lively scene that is different from the current market situation.

6. Buyback: The exit method with the most stable returns

Buyback is mainly divided into management buyout (MBO) and shareholder buyback. Direct investment institutions repurchase shares.

Generally speaking, the exit rate of return through corporate repurchase is very low but stable. Some shareholder repurchases are even carried out in the form of repayment of loans, with total returns of less than 20%.

7. Liquidation: The exit method that investors least want to see

Venture capital that has confirmed project failure should exit through liquidation as early as possible to recover as much residuals as possible The operation methods of capital are divided into two types: loss settlement and loss write-off.

Liquidation is a stop-loss measure before a company goes bankrupt. Not all companies that have failed investments will undergo bankruptcy liquidation. Applying for bankruptcy and liquidating is costly and requires a long and complicated process. Legal procedures, if a failed investment project has no other debts, or even though it has a small amount of other debts, the creditors will not pursue them, then some entrepreneurial capitalists and companies will not file for bankruptcy, but will use other methods to operate. And determine the distribution of the enterprise's residual value through negotiation and other methods.

Bankruptcy and liquidation are a last resort. The advantage is that part of the investment can still be recovered. The shortcomings are obvious, which means that the investment in this project will be a loss and the return on capital will be negative.

The above seven methods each have their own advantages and disadvantages. Exit subjects have different focuses and suitable exit methods. See the table below for a summary:

(Picture source: Beituo Capital)