Top Advantages Of Private Equity Funds

I have been associated with in the field of Private Equity for quite some time now and I am often asked about Private Equity. Basically, I have questions from people who are not proficient with the benefits of investing in Private Equity, or in most cases they do not have a clear idea of what Private Equity stands for!

Everstone Capital -  Private Equity

Generally invests in companies which are privately owned -- it can be owned by an entrepreneur OR A FAMILY. They can also acquire businesses that have many divisions or subsidiaries. Often, they can also take over public companies and make them privately owned! Private Equity ownership has quite a few advantages that help it create value and procure capital gain I regular intervals.
•    The scope of investment is wide in this sector. Private Equity funds in India can invest in the unlisted companies which are just at the inception of their venture. Also, they can acquire the neglected divisions of a large corporate house. At times, companies that are not much appreciated by the stock market can be privatized.

•    The fact that Private equity firms scrutinize the potential of the companies they invest in, adds to their credibility. They are extremely selective and invest significant time and resource evaluating the growth potential of companies, to have a better understanding of the risks involved and how to mitigate them. Often thousands of companies are rejected for one perfect company with all the right parameters to achieve the desired growth.

•    A clear picture of accountability is established in these firms. For instance, there are many Private Equity firms in India whose management is directly answerable to an engaged and professional shareholder. He has the authority to take actions in order to protect its shareholding. This kind of a clear accountability between the company and the shareholders indicates a tangible incentive system wherein there is no is reward in case of failure.

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