There are various different things that are not properly understood about private equity investment. Many business owners do not want to work with private equity firms because they fear they will lose the company they worked with. In modern times this does not often happen. Most firms and specialists like Marc Leder agree that the goal is to grow the company, not to take control from the owner.
Whenever thinking about financing options, you need to consider all available options. Because of this, here are some private equity investment benefits you should know more about.
Getting Good Value For Shares
Private equity deals are capable of providing much funding to the company owners that want a really good return on the shares they own, together with a really strong cash injection that can accelerate growth. When the circumstances are right, using private equity investment offers the high value the company owner wants, especially when comparing with traditional sales.
Private equity firms have access to huge funding amounts. They often look for companies that have strong growth potential. If a company is identified as having high growth potential, high value is paid since significant future returns are possible.
The Benefit Of Long-Term Investment
A private equity firm normally invests for a long timeframe, usually up to 5, 10 or 20 years. This means there is a long investment horizon present, which would benefit the company in various different ways. Investors want to create a highly effective strategy while minimizing risks and making sure as much capital as possible is preserved.
Because there is almost always a really patient approach, final extracted value is always higher. Both investors and companies make as much money as possible.
Creating High Value
Statistics show that the companies that are backed by private equity will grow faster than the other businesses. Basically, 2 thirds of the private equity deals led to a growth of over 20%. Such returns are possible because of the fact that private equity investors will always be highly experienced. They really know what they do, usually coming to the table with years of actual experience in investments and even the industry they cover.
Investors Are Not Involved As Much As People Fear
The private equity investors will normally take ownership of most of the shares but they do not always take the direct business role that people think. Owners and management teams normally remain in the managerial roles while receiving an extra benefit in the expert guidance that is available, together with the extra financing, of course.
There are numerous investors that will help the companies to develop really good strategies and a truly stable growth plan. Then, the investors take the back seat and allow businesses to manage themselves. This is why when you sell the business to the private equity company you do not actually remain employed by that company. When you initially make the sale, you end up with lower value but after some years, the shares that you still have are going to be worth more.