Guide-To-Private-Equity

Guide-To-Private-Equity - A Guide to Private Equity A guide...

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A Guide to Private Equity A guide on equity investment in private business.
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What is Private Equity? Private equity is an investment class that encompasses all types of equity investment into private businesses. It also encompasses investments into public companies where the investment has the character of a private equity transaction. Private equity can be broadly broken into the following categories: Venture Capital; Expansion Capital; Buy-Outs/Buy-Ins; and special situations such as Private Placements, Pre - IPO funding and PIPEs (Private Investment in Public Entities). Venture Capital Is often used to describe the private equity sector as a whole, but more accurately describes investments made in companies that are in an early stage of development (typically prior to the company generating profits). Expansion Capital Refers to transactions where private equity managers invest capital in an established company that will be used to fund growth opportunities or to expand the company s business into new markets. Buy-Outs/Buy-Ins Refers to transactions where private equity managers provide funds to enable current operating management to acquire an existing business (a management buy-out) or to enable an external manager or group of managers to buy into a company (a management buy-in). Private Placements In a private placement the private equity manager provides liquidity to existing shareholders through the purchase of existing shares. Pre-IPO In a Pre-IPO investment the private equity manager acquires a stake in the business prior to its initial public offer ( IPO ) and then assists the company to prepare for its IPO and stock exchange listing. PIPE (“Private Investment in a Public Entity”) Is a private equity investment in a company that is listed but possesses similar characteristics to that of a private company. In most cases its shares are seldom traded on the stockmarket, and the company is not widely followed by financial investors or analysts. As a result, the company does not have ready access to the capital markets to raise new funds. Some private equity funds are focused on investing in one or two of the above categories, while other funds invest across the spectrum of private equity. These funds are commonly referred to as generalists . Why do Private Businesses Need Private Equity? 1 What benefits do Private Equity Managers Provide? 1 How do Private Equity Firms Generate Returns? 2 What are the Investment Timeframes for Private Equity Funds and Investors? 2 Some Common Private Equity and Financial Terms: 3 Case study: Example of a Private Equity Transaction 4 Arlo Private Equity Example 5 Contents
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1 Although private equity transactions involving listed companies have been frequently reported in the media, public equity investments in private businesses are far more common.
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Guide-To-Private-Equity - A Guide to Private Equity A guide...

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