The Impact of Private Equity Investment on Corporate Governance of Private SMEs

Abstract

For a long time, the development of small and medium-sized enterprises (SMEs) in China has been encountering bottlenecks, mainly due to narrow financing channels, mainly through loans from friends and relatives and bank loans, while equity financing and debt financing are obviously insufficient. Private equity investment can not only bring SMEs the necessary funds for development and broaden financing channels, but also provide positive governance factors in the management of enterprises and help owners to supervise the management of enterprises. At the same time, private equity investment can drive the rapid progress of China's high-tech industry and promote the good development of China's economy. The article concludes by pointing out that SMEs should take corresponding measures from themselves to proactively attract private equity investment and broaden the path of enterprise development, and also makes suggestions on how China should further promote the development of private equity investment.