Subject financial management

1. Private Equity
Prepared By:-
M.S.SaHiR

2. Private equity is medium to long-term finance
provided in return for an equity stake in potentially high
growth unquoted companies. Some commentators use the
term “private equity” to refer only to the buy-out and buy-
in investment sectors.
To avoid confusion, the term “private equity” is used
describe the industry as a whole, encompassing both
“venture capital” (the seed to expansion stages of
investment) and management buy-outs and buy-ins.
Definition:-

3. Private equity provides long-term, committed share
capital, to help unquoted companies grow and
succeed. If you are looking to start up, expand, buy
into a business, buy out a division of your parent
company, turnaround or revitalize a company,
private equity could help you to do this.
Cont…

4. Obtaining private equity is very different from raising
debt or a loan from a lender, such as a bank. Lenders
have a legal right to interest on a loan and repayment
of the capital, irrespective of your success or failure.
Private equity is invested in exchange for a stake in
your company and, as shareholders, the investors’
returns are dependent on the growth and profitability
of your business.

5. Private equity backed companies have been shown to
grow faster than other types of companies.
This is made possible by the provision of a
combination of capital and experienced personal input
from private equity executives, which sets it apart from
other forms of finance.
Cont…
Advantages/ benefits of Private Equity:-

6. Private equity can help you achieve your ambitions for
your company and provide a stable base for strategic
decision making.
The private equity firms will seek to increase a
company’s value to its owners, without taking day-to-day
management control.
Although you may have a smaller “slice of cake”, within
a few years your “slice” should be worth considerably
more than the whole “cake” was to you before.