China's Private Equity landscape
The People’s Republic of China is the most popular destination for the investment of private equity in Asia. Private equity in China accounts for two-thirds of the total investment funds received in Asia.
The process of investing in private equity in China differs depending on whether the private equity fund is an offshore fund or an onshore fund.
Management incentives and earn-out mechanisms are popular in PE transactions in China. Furthermore, founders are often bound by contract to not exit until the initial public offering (IPO) or a particular trigger event, such as a merger or acquisition. While structuring the terms of the deal, PE investors in China often focus on the responsibilities and roles of the management and the founders. Special emphasis is placed on structuring incentives for company management and the founders because they are a key factor in the success of a company in China.
Investing in China confers the following advantages to private equity funds:
Private equity in China faces the following challenges:
Private equity in China is an integral part of the changing global economic system. Click on the following links to find out more about private equity and capital markets:
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