As independent adults we are often expected to know what financial terms are, although throughout school we are often not taught about it at all. Even basic advice on tax. Often the terminology used for the financial aspects of life will confuse people.
We have decided to give a simple, straightforward guide to what private equity actually is in the hope that it will come in useful for anyone who is struggling to get their head around it.
Private equity explained
Private equity is basically putting an investment into something out with the stock exchange market. It’s a term which is generally used to describe all of the different funds that take money from a group of keen investors in order to culminate millions and in some cases billions of funds. These funds are then spent to acquire stakes in companies.
Private equity is often confused with venture capital, although private equity is usually identified with the search for mature and revenue which is looking for a bit of a face-life to make their business more revitalised.
Private equity is more specifically for established business investments. These sort of bigger companies are usually franchises who specialise in manufacturing and services. Venture capital is more appropriate for younger companies who aren’t yet established. These companies are usually trying to develop and sell cutting-edge technologies which have a big potential in investment return.
How does private equity work?
In a lot of cases you’ll see that a private equity firm will purchase a company outright. Sometimes the previous founders will continue to work and run the business – although this will probably not be the case if the company bought were under-performing in their industry. The other common private equity strategies include cashing out current investors within a company (in many cases the founder), providing expansion capital and helping out a business on the brink with providing recapitalisation.
Leveraged buyouts are also associated with private equity. A leveraged buyout is when the fund borrows additional finances to increase its buying power.
Who are the best private equity companies in the world?
If you are reading this article in hopes to one day be able to invest your own money, we have completed a list of the worlds best private equity specialising companies. These companies can be contacted through their websites and have extensive information on their website to what methods in private equity they use. Have a look and see if one of these companies and the right one for your business venture.
EQT are based in Stockholm, Sweden and are considered the best in private equity in Scandinavia.
Goodwin are a company who provide the best private equity service in America. They also provide the services of financial industry, real estate industry and much more. Have a look at their private equity services here
RRJ have been the leading private equity experts in Asia for many years, based in Hong Kong and Singapore, this companies services are perfect for individuals looking to invest in Asian businesses.