What is Private Equity Investing?
Before a company is publicly traded on a stock exchange it remains a private equity company. Effi Enterprises is experienced in private equity financing for start-up companies and emerging companies who have not yet gone public. Even though private equity investments can be contributed to any type of company, Efraim Landa and Effi Enterprises offer private equity investments specifically to companies which are involved with developing and implementing of high tech medical equipment.
Private Equity Investing
Sometimes an individual may be a private equity investor, but generally a private equity fund is set up by a group of investors who all contribute to a private equity fund. Once the fund is established it is used to support the investment in the company. Most generally, a private equity fund is used to support a variety of investments which are used to purchase the controlling interest in multiple companies. Each contributing investor receives portions of the profit that is generated from the investments. The portion of profit each one receives is proportional to the size of their investment into the fund. Effi Enterprises contributes private equity investments in start-up and emerging medical companies.
Strategies for Investing
There is a considerable amount of strategy that is involved in making investments of this kind. Basically there are three types of strategies. One of the most common is to raise venture capital which is funds that are invested in a startup company that has a great potential and a high probability of being successful. The goal of this type of private investing is that the company will become profitable enough to eventually go public with its investing possibilities. A second type of private investing is growth capital which is invested in a more established business with the intent of helping it expand its services. And the third type of private investing is where several investors put funds together to implement a Leveraged Buyout (LBO). This is a purchase of a company that is either losing money or is underfunded. Effi Enterprises is a private investor in companies and they can also offer their expertise in the area of counseling companies on their available options.
Private Equity Investing and its Advantages
The main advantage for those who engage in private equity investing is that those who contribute are directly involved in the control of the company. They do not have to please any shareholders so they don’t have to worry about any other outside interests. Nor do they have to justify their decisions to another party. This allows the company to concentrate on their long term productivity and a more gradual build up of profits. This aspect can be advantageous to the company too. And investors are more likely to enjoy larger dividends when the company expands to the point of going public with their investments. Private equity investors earn money through their investment in private companies. And then the company benefits from the investors experience and expertise such as Effi Enterprises who can contribute business savvy which can help the company succeed.
Posted on June 10, 2012, in Effi Enterprises, investing, private equity, Private Equity Financing and tagged business financing, private equity, private investing, VC, Venture Capital. Bookmark the permalink. 2 Comments.