30 concepts that must be understood by equity investment

Private equity fund

The private equity fund also refers to the investment of private equity, which is the PE that we often say, is divided according to the investment field. The private equity fund invests in the equity of unlisted companies and is an equity investment in unlisted enterprises. It is mainly to withdraw investment income and cost through future listing, or to withdraw from the acquisition of listed companies.

The profit point of private equity equity

"The profit point of equity private equity is mainly the difference between the primary market and the secondary market. The hot IPO has a great role in leaving the first -level market. At the same time Large, SME funds have made great contributions in industrial progress, social employment, and corporate financing. "The above person said.

Angel (Angel)

Most of the time, the companies that angels are investing will be some very, very early companies, and they do not even have a complete product, or only one concept.

The amount of investment in angel investment is often not very large. Generally, it is within the range of 5-1 million, and the shares in exchange are ranging from 10 % -30 %. Most of the time, these companies need at least 5 years to go public.

Venture Capital

Generally speaking, when an enterprise is in the early stages of entrepreneurship, for example, although there are relatively mature products, or sales have begun, it has not yet formed a market size and cannot generate a lot of cash flow; angel investment at that time 100 at the time of 100 at that time Thousands of funds are like drizzle for them. As a result, risk investment has become their best choice. Generally speaking, the investment amount of venture capital will be within 2 million to 10 million. A few heavy investment will reach tens of millions. But on average, 2 million to 10 million is a reasonable number, and in exchange for shares, it is generally between 10 % and 20 %. Enterprises that can gain risk investment generally have greater hope to be listed in 3-5 years.

If it is necessary, the internationally renowned VC companies include Carlyle Group, Newbridge Capital, Quantum Fund, Black Stone, IDG (US International Data Group), and IDG (American International Data Group). Sequoia Capital.

investment bank

(IB, Investment Banking)

He has a name we often say: investment bank. Generally, investment banks are responsible for helping enterprises go public, reorganized, merged acquisitions, and securities issuance, underwriting, etc., and then charge a certain fee from the amount after successful financing. (The common is 8 %, but it is not a fixed price)

Goldman Sachs, Morgan Stanley, Merrill Lynch, and so on. (Of course, there are many well -known banks such as Citi Bank, JP Morgan Chase, and it has a very good investment banking business.)

M & A

(Mergers and Acquisitions)

That is, corporate mergers and acquisitions, including mergers and acquisitions, two meanings and methods. Internationally used to use mergers and acquisitions, collectively referred to as M & A, and is called mergers and acquisitions in my country. Although these two words often appear as a synonym, there are still subtle differences between the meaning of the two words.

Acquire

(Mergers)

When one company takes over another company and establishes its own dominant position as a new owner, then such behavior is called acquisition. From a legal perspective, the acquired company no longer exists, and the buyers have annexed their business and continued to exist in the stock trading market.

merger

(Acquisitions)

Strictly speaking, the merger occurs in two companies with equivalent strengths, and the strong combination has achieved resource integration. The two parties reached an agreement to set up a new company to replace the original two companies to operate separately. This situation is more accurate called "peer merger." It turns out that the shares of the two companies will be replaced by a new company's shares. For example, Daimler Mercedes -Benz and Chrysler merged into the new Daimler Chrysler.

The relationship between M & A and Angel Investment, PE, VC

M & A funds currently appear in mature markets, which are high -end in private equity investment (PE). It is also the mainstream model of PE in Europe and the United States. Unlike the Angel Fund and VC, the objects selected by the M & A fund are mainly mature enterprises, while Angel Fund and VC are mainly invested in entrepreneurial enterprises; traditional M & A funds aim to obtain control of target enterprises, seek management power to enterprises, and their management rights. Angel Fund, VC, and narrow PE exist in the form of shares and participate in the daily operation and management of enterprises.

Mother Fund FOF

(Fund of Funds, FOF)

FOF and TOT are common investment methods in the "Combination Fund" mode. I will introduce FOF in a more concise and popular language, which is the fund in the fund, commonly known as the "mother fund".

There is a essential difference between FOF and general funds -that is, the nature of their investment goals is different. Fund investment projects are very wide. Common stocks, bonds, futures, and gold are well -known projects. FOF invests through another method -they invest in fund companies. In other words, FOFs generally do not invest in stocks, bonds, and futures we often say. They will choose to invest in fund companies with strong profitability to invest. TOT

(Trust of Trusts)

The literal understanding is "trust in trust", which is a trust that specializes in investment in trust products. In a broad sense, TOT is a small category of FOF.

At present, the general operating model of TOT in China is funded for a certain institution, setting up a parent trust product on the trust platform, and the selection of the establishment of the established Sunshine Private Equity Trust plan for the establishment of the Mother Trust product for investment allocation to form a trust portfolio product of a parent trust product to invest in multiple subsidiary trust portfolio products Essence

Ordinary partner

(General Partner, GP)

Most of the time, GP and LP exist at the same time. And they mainly exist in some companies that need large amounts of capital investment, such as private equity funds (PE, Private Equity), Hedge Fund, and Venture Capital. GP is the representative of those partnerships. In other words, GP is those who specifically determine investment decisions and the company's management and management.

Limited partner

(Limited Partner, LP)

We can simply understand as investors. Many times, a project needs to invest tens of millions or even hundreds of millions of funds. (Most investment companies, there will be many different projects), and the GPs who invest in the company do not have so much money -or they are unwilling to invest in so many company funds to invest in one project. And there are always people in this world. They have a lot of cash, but they do not have good investment -to eat interest in banks in the financial industry. As a result, LP was born.

After LP, after a series of procedures, you can participate in the partnership of the partnership with your own money (also containing physical, intellectual property or land use rights) to take care of the GP; while GP takes LP funds for actual projects (here refers to private equity Equity fund) Management investment. With the profit obtained, the two parties are divided into this profit. This is the classic "you (LP) money, I (GP) contribute" in real life.

Original stock

Stocks issued before the company apply for listing. In the Chinese securities market, "original stocks" have always been synonymous with profit and fortune.

The purchase opportunities for original stocks are very limited. Most buyers are internal investors, private equity objects, professional risk funds, and investors who are pursuing high returns. The purpose of their investment is to wait for the company to sell the original stocks in their hands after listing, collect cash, and obtain high returns to invest.

Usually this cycle is about one to three years, and the profit of the original stock is several times, dozens of times, or even hundreds of times. If investors buy thousands of shares, they will go public in the future and rise to tens of yuan. They can issue a small fortune. I calculated. This is the first bucket of gold in the Chinese stock market.

How to benefit original stocks

取 Through the listing of the enterprise, you can obtain several times or even tens of times high returns. Many successful people get the first bucket of gold from it.

Investors buy and sell stocks are companies stocks that have been listed on IPOs. The stock market is called the secondary market. Any ordinary investors can buy it. Equity investment is called the first -level market, that is, before the company is listed, it invests in its shares. At this time, the company's shares cannot be freely circulated, and ordinary investors generally have no channels to buy. At this time, the company's stock price is low and the investment cost is small. Investment in the company can earn more money after its listing.

银 Cash dividends that are much higher than bank interests are obtained through dividends.

Many people are worried that investing in the original stock to make money to make money. In fact, listing is only a company's capital securitization. The method of transgender of primitive stocks. Basically High dividend profit.

The way to invest in original shares to obtain income

I Investment company has listed IPO cash: including motherboards, small and medium -sized boards, GEM, New Third Board, and future strategic emerging version

公司 mergers and acquisitions: The investment company was acquired by other companies in the industry (such as the purchase of "fast taxi", "Ctrip.com" to buy "where to go" before the taxi company "Didi Taxi"

权 Equity transfer: Equity investment is divided into early and late stages. Generally, it is divided into angel rounds, A, B, C, D rounds, etc. Invest in the early days of the sky or A round, B round, that can be transferred to the later C and D rounds. Wait for the company to withdraw advance in advance to obtain income.

资Poccles: Some investment projects will repurchase due to performance or strategic considerations. For example, we invest in a company X Wan equity. By the agreed time, the company will be repurchased by X+S,000.

Key person clause

(Key Man Clause)

It means that when the core member of the designated fund management team is died or leaves the fund, the fund will suspend investment or dissolution and liquidation. The exit, departure or replacement of key characters may have a significant impact on fund operations. The key person generally refers to the core members of the team who played key role in important links such as fund raising, project acquisition, investment decision -making, value -added services, and investment exit. Therefore, key person clauses are usually a must -have clause for private equity fund limited partnership agreements.

due diligence

Dye dyeing survey is a process of a company to the fund's bottom of the house. The standard foundation will do three due diligence:

调 Industry/Technical due diligence:

● Find some other companies operating with the enterprise to ask about the general situation; if the company's upstream and downstream, and even competitive partners say yes, the fund naturally has investment confidence;

● Technical due diligence is more common in investment in high -tech industries of new materials, new energy, and biomedicine.

： Financial due diligence:

Enterprises are required to provide detailed financial reports, and sometimes they will send accountants to audit the authenticity of financial data.

：Per due diligence investigation:

● Fund lawyers issue a list of questionnaires to enterprises, asking enterprises to set up registration, qualification permits, governance structures, labor employees, foreign investment, risk internal control, intellectual property, assets, financial taxation, business contracts, guarantees, insurance, environmental protection, involved, involved in involved The original documents are provided in various aspects.

● In order to cooperate with the law due to a more powerful investigation, enterprise lawyers generally complete the questionnaire filling in.

Preferred shares

Priority shares are the concept of invention of the British and American law systems. Both listing and non -listed companies can issue preferred shares. Compared with ordinary stocks, priority shares always have priority in dividend distribution and company liquidation. Buffett especially likes to invest in preferred shares.

Priority stocks are definitely prioritized compared to ordinary stocks. Priority shares issued by private equity are consistent with ordinary shares in voting rights, and there are no priority and no priority. Priority is mainly reflected in the other two rights. If the company liquidates, the fund investment priority shares are preferred; in terms of dividend distribution, the company's dividends are divided first. The priority of preferred shares is also reflected in the exit priority. In the exit mechanism, the particularly strong fund also requires the right to give preferred shareholders to the withdrawal of the withdrawal of domestic shareholders.

PE fund investment threshold, term and expense

私 Investment threshold: Private equity funds are high -level investment demand, and have high requirements for investors' assets. According to the difference in fund registration, the size of the fund is different, and the investment threshold of a single investor is also different. Generally, the fund size is below 500 million yuan, and the investment threshold is 3 million yuan and 5 million yuan is more common. Those with a fund size of more than 500 million yuan, and the investment threshold is 10 million yuan.

股 Dialogue: The term of the private equity fund is long, generally 5-8 years. The term settings of private equity funds are divided into investment period, exit period, and extension period. For example: a fund period is 5+2 years, then 5 years are the investment period and 2 years is the exit period; the period of the fund is 3+1+1 year, then the three years of the investment period is One year is the extension period. The extension period is mainly used to continue to handle the relics that have not been exited the previous year.

Depending on the fund's attributes, investment industries, investment projects, and exit, the fund market is different.

基 Expenses: Different funds are different according to scale, raising period, fund period, and management agency.

● Subscription fee: Subsulation fee is the cost of subscribed by investors during the fund raising period. This fee is mainly used for the expenses incurred during the fund market promotion, sales, registration, etc. Generally speaking, investors promise 1%-3%of the amount of capital contribution. There are also some funds who do not charge subscription fees.

● Management fee: Management fee is the management compensation paid to the fund manager, which is generally charged year -on -year.

● Performance remuneration: Private equity funds must extract some of the profits to the fund manager before distributing the income. This part of the profit is the most important income of the fund manager. In terms of form, it can be 20%of the fund's profit, or 20%of the profitability of the project, or 20%of the earnings of the profit beyond the benefits of investors.

PE fund's regulatory agency

On June 27, 2013, the Central Committee issued the "Notice on the Division of the Management Responsibilities of Private Equity Fund": "The CSRC is responsible for formulating the policy, standards and specifications of the private equity fund, and the aftermath management of the establishment of a private equity fund, responsible for statistics, responsible for statistics And risk monitoring, organize supervision and inspection, investigate and deal with violations of laws and discipline in accordance with the law, and undertake the protection of investors' rights and interests; The government's funding standards and specifications, the proportion and exit mechanism of private equity funds.

Corporate valuation

The valuation of an enterprise is the core of private equity transactions. After the valuation of the enterprise is set, the proportion of financing to investors can be calculated according to valuation. Enterprise valuation negotiations have a milestone in private equity negotiations. This threshold has spanned. As long as the fund is not too ruthless, such as requiring to refund the rights or gambling, the transaction can always be made.

In general, how the enterprise valuation is the result of the game between the two parties between the private equity transactions. Although there are some objective standards, it is essentially a subjective judgment. For enterprises, the higher the valuation is, the better. Unless the enterprise is confident that this round of private placements will be listed directly, it is quite unfavorable to the next round of private equity in the next round of private equity financing. Many companies have stuck after doing a round of private placement. The main reason is that the previous round of private equity has raised the price too high. The company is subject to the lack of anti -dilution clauses for subsequent transactions, so they have to rigid.

Value method: P / E ratio method and horizontal comparative method

➀ ➀ ➀ ➀

For companies that have been profitable, you can refer to the price -earnings ratio of the listed company in the industry and then discount, which is the mainstream valuation method. Sometimes the P / E ratio Law is not fair to the enterprise, because before the private equity investment is absorbed by private enterprises, the need for tax planning is unwilling to release profits on the book. Obtain. In this case, the valuation of the enterprise must adopt other corrections, such as using EBITDA.

➁ horizontal comparative method

The current operating status of the company is compared horizontally with the valuation of companies that have been privately equalized in the same industry in the same scale. With reference to the valuation of other private equity transactions, it is suitable for the company's unprofitable state.

Experience value: The first round of private equity of manufacturing companies is generally 8-10 times or 5-8 times EBITDA; the first round of private equity valuations of service companies are between 50 million and 100 million yuan.

Investment protection

One vote veto system of the board of directors

The company's standard governance structure is arranged like this. At the shareholders' meeting, the shareholders voted in accordance with the rights of the equity or shares it represented; No matter how designed, private equity investors cannot form an overwhelming advantage in the board or shareholders. Therefore, funds often require the establishment of some "reservations" that can be dispatched by them to be veto on the board of directors, which is the most important protection for private equity funds. How wide the scope of retention is one of the most critical contents of private equity negotiations.

Performance

(Performance adjustment clauses, performance rewards and punishment clauses)

The performance of the gambling mechanism is famous through the use of private equity in Morgan Stanley and Mengniu. According to the disclosed transaction, Mengniu finally won the gambling, and the prince's milk lost the gambling. Yongle Electric was unable to complete the embrace of Gome for his gambling performance.

The gambling is the performance of the enterprise, and the bet is a small part of the company's shares/equity. Regardless of the winning or losing, investors are beneficial to the map: If investors win, the proportion of investors' equity ratio is further expanded, and sometimes even reached a holding; if the investor loses, it means that the company has achieved investment goals, good profit, investors, investors Although the shares are lost, the value of the remaining shares of the remaining shares is far greater than the loss. Therefore, gambling is an important means for investors to lock investment risks. In the context of the financial turmoil, more and more investors are required to use the right gambling.

However, gambling is particularly easy to cause the corporate mentality. In order to complete the indicators set by the gambling gambling, it is not expected to use the long -term overall value of the enterprise to strive for short -term orders or over -cut costs.

Anti -dilution

The situation that investors are more afraid is that information asymmetry has led to a high round of private equity transactions. Instead, the transaction price of the later investment is lower than the previous investment, resulting in loss of account investment value of investors. Therefore, anti -dilution measures need to be triggered.

If the later investment price is higher than the early investment price and the investor's investment is appreciated, it will not lead to anti -dilution. This is very similar to a real estate project in two phases. If the first phase of the owner discovered that the second phase opening price is lower than the first phase, it is often required to refund the difference or check out; The first phase is high, and the first phase of the owner feels that it is a matter of righteousness. Private equity investors also have the same mentality.

Mate

When all the terms cannot guarantee that investors' profits will withdraw, especially after three or five years of investment, companies are still hopeless IPO, and investors cannot find the opportunity to sell the equity of the enterprise. Investors will ask for the final "nuclear weapon" - — Redemption, requires companies or corporate shareholders to buy back the investor's investment in full, recover the initial investment investment, and obtain a certain amount of benefits.

turbine

Warrants (Hong Kong investors are vividly translated into "turbine"). They are called claims in the stock market. In private equity transactions, they are called equity purchase or futures rights. The right to shares.

The use of turbine is to lock the future income of the next round of investment. The price of turbine is generally lower than the fair market price. Under the situation of good operating conditions and the investor's equity has greatly appreciated, investors use discount prices (generally higher than the first round of investment prices). The company's value growth has the contribution of investors, and the capital increase should be discount. The turbine can also be understood as conditional installment.

Source: Oriental Wealth and Heart Flow Flow, reprinting this article is out of the purpose of passing more information. If there is an error or infringe your legitimate rights and interests, please leave a message, we will correct and delete it in time, thank you

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