In the world of business, private equity
financing is termed as way of raising capital by selling business shares to
investors. The capital which is raised through private equity financing is not
paid back in installments along with interest, unlike debt financing. In its
place, investors become partial owner of that particular business by putting money
in it. Then they are entitled to share profit of a business over time. Within
three to five years, most investors wait for a return on their investment.
Friends and family is the common source of
private equity for business owners. Unlike personal loan, once business starts
making profit, investments done by family and friends are paid back, although
it might take several years. Often, it has been observed that with the
operating cash flow of business, business owners fix payments to investors. One
can say that when the business grow and makes profits, investors also make
money. And once they get specific set of return on their investments, they usually
get rid of that business in which they are involved. Usually, family and
friends investments are made at the initial stage of business but as it grow
and proves its worth, the business start getting financing from angel investors
. While venture capitalists and angel investors are lumped jointly as one funding
source, actually they provide two different functions.
The Private Equity Advantage
As it is said that private equity financing
is not for all but it provides greeting option for debt financing to several
business owners. In fact, private equity financing against debt financing
cannot be charged with two major gripes business owners’ level due to risk with
personally guaranteeing a loan and the constraint placed by it on available
cash flow. Private equity eradicates the drawbacks of debt in that and for paying
down debt, it does not divert capital from the business rather it shares risk in
the business along with the entrepreneur.
Another advantage of private equity is that
you don’t need to pay right back to investors after they provide funding to
your business. It means that one has more time for growing his business before he
starts worrying about how he will how he will pay for it or not. And in case business fails totally, one
doesn’t have to repay. It is fact that investors either swim or sink or alongside
the business owners.
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Moreover, private equity is actually an
umbrella term for huge money raised directly from recognized institutions &
individuals and pooled in a fund that mostly invests in certain range of
business ventures. For considerable long-term gains, attraction is the
potential. Generally the fund is placed as a limited partnership, with the
investors as limited partners and a private equity firm as the general partner.
Typically, private equity firms charge huge amount of money fees for taking
part in partnership and be inclined to focus in a particular investment type.
Private Equity at Alcor MNA
With in-depth knowledge of the entire
Private Equity investment process including– identification, initiation,
structuring, valuation and execution– our team has the ability to execute
transactions quickly and efficiently. AlcorMNA advise both listed and unlisted
companies in raising growth capital. We perform in-depth due diligence on each
fund that we consider, marshaling resources from across our investment team to
identify, vet and select investments that can help clients achieve their
portfolio goals.
Alcor has strong relationships with key
global Private Equity players & venture funds and understands investment
themes and priorities of various financial sponsors. This helps us connect
growth companies with PE firms in a focused and timely manner.Our deal
structuring expertise and capability to execute private equity transactions
through every stage of the deal process is a key strength.
Alcor
M&A is a leading advisory firm providing financial services with an
emphasis on customized solutions in the areas of M&A advisory, Private
Equity, Debt Financing and International Business Development. These services
leverages insights, relationships and a culture that emphasizes a strong
orientation towards excellence.
For
additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business
day.
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