Private Equity Firms Give Investors More Choice
Equity is a common financial term that refers to the value of a property or another type of asset, but this is a value that is determined only after any associated liability, such as a loan or a lien, are deducted. Translation: your home may have a net worth of $150,000, but if you currently have a mortgage that will take $95,000 to pay off, then your home’s equity is only $55,000. In the business world, companies with loans or liens attached to them cannot be traded upon in terms of stocks, but they be invested in privately with the use of private equity. Private equity firms exist to pool together large sums of capital — funds for private investment — from various investors. These investors may be other companies, but generally they are private individuals with large net worths, and they are individuals who wish to remain private about their investments — which is why they utilize an equity firm to handle the managing of investment funds for them.
Private equity investment firms use various strategies, as well as the current status of market shares, to determine what types of companies to invest pooled together investment funds into. Sometimes companies who, from the offset, may not seem worth investing in, are deliberately invested in and grown way past their initial potential — and then they’re sold to larger companies.
Investing via a private equity investment firm can be beneficial to you for two reasons:
You do not have to publicly disclose any of your investments. After all, it’s your money, so what you choose to spend it on or invest it in should be solely your decision. Only the firm you invest with, and its partners, such as managing partner Gary Crittenden, will know the companies your invested money is funding.
Your invested money will be in good hands. Private investment companies work hard to determine which start-ups and failing companies are the best to invest in, so mistakes are rarely made.
While private equity investment firms are very much “on the books” with the type of investing they do, because the private investors involved are kept private, some people feel that investment firms act a little shady. Some also feel that these firms are somewhat vulture-like in how they find companies to invest in. But this couldn’t be further from the truth. First and foremost, private investors are entitled to some secrecy. And second, private equity firms act very much like banks and other financial institutions in terms of finding out who they should invest in and why.
So if you have some investment money you would like to put to good use, and you’d like to see a good return on that investment, contact a private equity firm and see what they can do for you. The process may be lengthy and somewhat time consuming, but there is definitely a big pay-off at the end. And besides the return you receive, you can feel good knowing you helped to get another company up and running.
Category: Investing
