Detailed View Of Private Equity Investment

Private equity is the standard way of making investments into private companies or obtaining the buyouts from companies making one delisted from the structure of the company. Big investors who intend to earn profit from the wealth generally invest in equities to the company which is willing to expand its infrastructure and boundaries. Many a times private equity is also used for expansion of work capital or to solidify the balance sheet. 

Private Equity

Types of private equity funds:

Leveraged buyout funds: This type of equity helps a firm or investor acquire the control over company mostly alone but in some cases they partner with other private equity firms to do the same. In this case the total amount does not come from investors. As a matter of fact a large amount is borrowed from the banks to do so. The hard assets of the company and the running cash flow is often used as collateral against the loans of the bank after acquiring the company. This is a safe game as the lenders will have the advantage of knowing the situation of company and liquidating its assets in case of bankruptcy.  

Venture capital funds : This is more of a trust fund where the firms or the private investors invest on the anticipation of the rise of the company and expect a good future with desirability from the customers. Small sized investments are done for startup companies, while high growth sectors such as internet, biotechnology and healthcare often receive the attention of high stake players. This investment is done for the growth of the overall growth of the company and development of technologies which will stand tall against customer desires and bear profits.

Growth equity funds : This is a broader category of equity investment as it done for the already powered up companies. This is broader in other sense that the investment is also larger than that done in venture capitals. Such investments are often done for expansion of business in other fields and other gain other verticals.