Private Equity

Private equity, or PE, is capital that is not traded nor listed on stock exchanges. It is often contrasted with public equity. Both public and private companies can issue private equity using their attorneys who will draft a private placement memorandum (PPM), or a document that presents information concerning how a business operates and its offering terms. The document further details the potential risks associated with a specific private investment. This is an affordable way for companies to gain investors.

Further, unlike public equity, private equity (most of the time) involves a small number of accredited investors that invest larger amounts of money, such as wealthy individual, angel or institutional investors. This increases your risk, since each investor holds more stock in the company. However, investors who participate in private equity are more experienced than the average investor. Thus, you will have a better chance to increase net a positive return on investment (ROI). In general, private equity investors aim for long-term profit, often depending on the company to develop before selling their stock.

PE Firms

PE firms also invest and, rather than purchase shares, often buy full ownership in companies. They hope to resell them for profit after making improvements to business operations, pricing, management, marketing, or other features. Selling the company is not the only option; it can also initiate an IPO and raise capital from publicly listing shares on a stock exchange. The company can additionally complete a merger or acquisition (M&A).

Private equity firms may also conduct a leveraged buyout to buy larger companies. By this method, institutional investors lend money to the PE firm to close their purchase. This allows PE firms to acquire companies that they didn’t initially have the funds for, which may lead to greater profit in the long run. Another method to engaging in private equity is venture capital: gathering a small pool of angel investors or professional VC firms to finance a small, emerging company. PE firms hope that these smaller companies will drastically develop, resulting in a high profit.

Decision-Making

We help you choose the optimal PE firm that aligns with your companies goals, as well as develop PE investing strategies

Business and Financial Analysis

We analyze your financials and business operations and strategy to help with PPM offerings and private equity firm engagement.

Exit Strategies

We provide guidance on your possible exit strategies to maximize your profit and return on equity

Benefits

At Issuer Consulting, we consult with you to ensure that you make optimal decisions when acquiring private equity. We will:

  • Assist you in choosing the right PE firm to engage with, one that aligns with you and your company’s goals and strategies
  • Plan a wide variety of exit strategies: IPOs, M&As, a sale, employee stock option plans, leveraged buyouts (LBOs) or management buyouts (MBOs)
  • Assess cap table structure and flow
  • Evaluate attorneys and investment banks that will optimally assist you in preparing a professional and appealing PPM
  • Create a timeline that highlights the optimal time to conduct an exit strategy (e.g., resale, IPO, merger, etc.)
  • Walk you through the entire IPO process if you decide to go public
  • Analyze your finances to mitigate your debt and ensure continued profit as you restructure the company

Our primary goal at Issuer Consulting is to keep our customers satisfied. The vast experience of our professional team, shown by our wide variety of services, ensures that you have the necessary guidance to lead your growing company to success.

More on Private Equity

Private equity is illiquid, which means that it cannot be readily traded or sold for cash without losing much of its value. Illiquid assets are unattractive to buyers, especially in the short term, due to this potential loss of value. Rather than short term investments, illiquidity is common to longer term investments like private equity; it may take a few years for an investor to restructure a company and profit off of their investment.

Capital Raising for Prospective PE Investors

There are also methods that help investors who don’t yet have the funds to engage in private placements. Rather than directly investing in a company, PE investors can use the fund of funds approach and invest in PE funds. The PE manager of the fund still needs capital from angel investors and other wealthy individuals; but this investment goes toward funds rather than another company. Mutual funds, for example, are fund portfolios that contain investments in multiple securities; this will promote diversification and consequently mitigate risk for the investors. This also makes it more probable that less experienced investors capitalize on their investments. Without extensive knowledge, an investor may invest in a fund that does not provide high return; however, if he invests in larger funds, he has a higher probability to profit.

Be cautious of the fees when using private equity fund of funds; this is a primary reason that investors don’t engage in PE fund of funds programs.

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