Showing posts with label Equity. Show all posts
Showing posts with label Equity. Show all posts

Wednesday, November 8, 2017

What is Private Equity?

What is Private Equity?

Investment capital is mostly directed to private equity, meaning societies that are not listed in the open markets. People often compare it with venture capital but this one only provides funding to new or recently opened companies.


Capital investors get their private equity from the shares of existing shareholders. They can also buy new shares from the company that are issued for those purposes.


Venture capitalists seek to transfer or sell their share in the longer term (3 to 10 years according to economic sectors) of capital gains. Their exit can be done little by little, or by selling shares on Wall Street.


We talk about financial guarantees (including shares) of unlisted firms in a market, hence the term "private equity", as opposed to public equity, which means securities that were subject to listing on a market. Bonds and guarantees of private equity are lower and liquidity because of the greater difficulty in selling is much less important. For this reason, the capital investment uses almost only on private equity, seeking superior performance over the long term.


Capital investment using private equity has three branches each one with different characteristics and focus of action:


Venture capital gives funding almost exclusively to companies that are starting and that have great potential for innovation and use of specific technology. Venture capitalists look for promising projects and although not all of them have the expected success, those who do keep the venture capitalists motivated to find opportunities.


Development capital: a logical extension of venture capital, capital development focuses on the established companies, with a historical account, a significant size and position on existing markets. The funding is used for internal growth or external company.


Capital transmission is a type of capital investment where a company would buy the totality of the capital of business that has a prospective future. It also known as leveraged buy-out because the company is basically ceding all their belongings to another one buy they continue to have the old structure and they pay the money back.


Capital returns are capital investments given to companies that have promising futures and that need to restructure their entire operations. These funds are also another form of leveraged buy-out.



Wade Henderson - recognized Professional - 15 yrs in the Business Finance Field - strong reputation for getting the deal done. IMMFinancial.com infrastructure finance and business finance.