Twentieth International Conference on Knowledge, Culture, and Change in Organizations

Abstract

In recent years, with the second wave of information revolution and the rise of mobile Internet, many new economy enterprises have emerged in China’s economic arena. At the same time, the rapid growth of private equity also lightens the dawn for the new economy enterprises. However, due to its non-public, profit-oriented, and long-term nature, private equity might magnify the existing risks and even bring higher risks to those new economy enterprises with short establishment time, long-term loss, unstable operations, and weak corporate governance. Therefore, it is of significance to analyze the risks faced by new economy enterprises in the process of their private financing and to strengthen risk management as well as risk control of these enterprises. Based on reviewing related literature and theories, this paper uses case study methodology to select a real-life typical new economy enterprise Group X as an example. Risks in the process of private equity are analyzed from four dimensions – financial status, operating conditions, corporate governance, and policies and laws – and propositions are made concerning corresponding risk prevention and management measures. Finally, this research draws enlightenment from the case and puts forward some thoughts and suggestions, hoping to help new economy enterprises prevent and control the risks in the private equity process.