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What is Private Equity Investment?

Oct 8, 2007
Private equities are equity securities of companies that have not listed their stock on a public exchange and are generally thought of as long - term investments. As they are not listed on an exchange, any investor who wishes to sell securities in private companies must find a buyer in the absence of a marketplace. Investors in private securities generally receive their return through one of three ways: an initial public offering, a sale or merger, or a re - capitalisation.

It first started in the UK in the late 18th century when entrepreneurs found wealthy individuals to back their projects. This method of financing soon caught on and became an industry in the late 1970s and early 1980s when a number of private equity firms were founded. This type of investment has since become extremely popular as there are a lot of opportunities for high financial gains.

The main sources of private equity investment in the UK are the private equity firms and business angels who are private individuals who provide smaller amounts of finance than many private equity firms are able to invest.

When you are making a private equity investment it is important to ensure that you are making optimal use of your internal financial resources. Some of the many ways you can do this is by planning payments to suppliers, carefully controlling overheads and checking quality control. Once you have achieved this you can then move onto external resources such as friends and family, banks, leasing and public sector grants as well as many other options which are available.

One of the many reasons why this type of investment is so popular is because it provides long - term, committed share capital which can help unquoted companies grow and succeed. As the investment is made in exchange for a stake in your company, the investors' returns are dependent on the growth and profitability of your business. As a result of this investors are only interested in companies with high growth prospects. However, provided there is real growth potential the private equity industry is interested in all stages, from start - up to buy - out.

The benefits of this investment is definitely worth it as private equity backed companies have been shown to grow faster than other types of businesses. This is made possible by the provision of a combination of capital and experienced personal input from private equity executives, which sets it apart from other forms of finance. Private equity can help you achieve your ambitions for your company and provide a stable base for strategic decision making.
About the Author
Mansion House Securities, at http://www.mansionhousesecurities.co.uk/, is a London based Investment House providing unique access to high growth business investment opportunities .
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