Guest Post by Elle Perkins, contractor with Platinum Equity (Learn more about Elle at the end of this post)
When starting or running a business, there are many ways in which to invest in the business. There are a number of business loans that can be taken out for start-up expenses or established business to expand. If it is a non-profit company, there are thousands of grants that can be secured to fund the costs of the business. One type of funding that may not be known to many business owners is the use of private equity.
Private equity investments can be used to:
• Start a company
• Expand an established business
• Buy out a portion of a parent company
• Revive a failing company
• Buy into a company
Private equity is an investment made by private investors who provide a business with capital that is long-term and committed. The private equity that is invested in start-up companies and established companies is used to help the companies succeed and allow them to experience more growth than they would if they were funded with a traditional loan or grant.
Private equity investors look for companies that have a high potential for growth and that have business objectives that make sense to the business model. Unlike a bank loan, the private equity investors have a stake in the company as shareholders, giving them a vested interest in making sure the company is successful. The amount of money the investors can earn is in direct relation to how profitable the company is and how much the company grows.
If an established company is looking forward to growing their business, a private equity investment can bring the owner some peace of mind. By bringing in investors the owner can enjoy the benefits without re-investing more of their own net worth back into the business. A private investor can be a growth catalyst for companies that have been held back due to the lack of funds.
If a company is in need to financial backing, looking for a private equity investor is a great alternative to traditional forms of financing. Many companies that are backed by private equity investors have experienced faster growth. With the long-term investment and the solid, flexible, capital base it provides, private equity can easily meet the development plans of any business looking forward to growing.
When an investor uses their private equity to fund a business venture, they become equity partners in the business. They are rewarded with the company’s success, as other shareholders are, and will work hard to make sure the business sees success. With the combined capital and experienced management skills that come from private equity investments, companies are able to take decisions based on strategy to achieve the success they are working toward. With private equity funding, businesses can focus on improving their business without worrying about repaying a bank back with interest. Private equity investors are committed to ensuring the companies they invest in are successful, the more profit the company sees, and the more profit the investors make.
GUEST AUTHOR: Elle Perkins is working as a contractor for Platinumequity.com – an equity firm specialized in mergers, acquisitions, and operations of companies that provide mission-critical products, services, and solutions in diverse industries.