Private Equity Investments From The Investor S And The Issuing Companies Point Of View

Research Paper (undergraduate) from the year 2013 in the subject Business economics - Investment and Finance, grade: 1,3, University of Applied Sciences Essen, language: English, abstract: The paper on hand aims at analyzing the financial model private equity from participants’ point of view. The introduction has shown the importance for the overall economy. Questions of the paper are: what are the criteria for successful investments for both parties; what are the advantages respectively difficulties from the perspectives of investors and issuers of private equity? In order to systematically approach the questions the author first provides the fundamentals of the concept. In a second step benefits and risks for the participants in private equity investments will be described. A simultaneous assessment of these will result in an overview reflecting potential profits and losses. The analysis focusses on theoretical descriptions; practical applications will not be considered. Information and data gathering is based on secondary literature.

Seminar paper from the year 2013 in the subject Business economics - Investment and Finance, grade: 1,7, University of applied sciences, Cologne, course: International Investment & Controlling, language: English, abstract: Private Equity plays an increasingly important role in the financing of a wide range of businesses. Over the past 20 years, private equity has been on of the fastest growing markets for corporate finance. One of the reasons the private equity industry exist is that, in many cases, companies have needs for capital which, for various reasons, cannot be met from the public markets. Investors that provide capital to private equity funds invest in an asset class that entails relatively high-risk and high illiquidity in what remains a largely unregulated market. Planning how to exit an investment is just as important as preparing to make one because a merger adds value only if synergy, better management, or other changes make the two firms worth more together than apart. The target companies are supported with accountants, lawyers, investment bankers and other specialists. Especially Start-up companies are often characterised by negative cash flows and demand high investments. PE gives the chance to reduce the financial gap between selffinancing and stock exchange listing and can also help to improve the equity ratio. Another advantage of PE for target companies is the increase of equity and an improved balance sheet structure. Regarding to that, the negotiating position is strengthened towards creditors, the credit rating is improved and the financial room for investments increases. The main disadvantage of PE for target companies is the weakened influence of the initial shareholders. Especially different strategically views between those two groups might be difficult to solve. Due to the fact of the high risk, from the investors’ perspective, PE is a very interesting form of investment. Especially under diversification aspects the investment in PE funds make sense, because the investors offer investment opportunities that can not be replicated in the financial market and on top of that have a low correlation with other asset class. The firms standard practice of buying businesses and then, after steering them through a transition of rapid performance improvement and selling them is at the core of private equity’s success.

Studienarbeit aus dem Jahr 2011 im Fachbereich BWL - Investition und Finanzierung, FOM Essen, Hochschule für Oekonomie & Management gemeinnützige GmbH, Hochschulleitung Essen früher Fachhochschule (-), Veranstaltung: Investment & Controlling, Sprache: Deutsch, Abstract: The majority of companies are in need of investment capital to pursue their growth strategies. Also, a large number of companies only display a low equity ratio and as a result possess bad credit worthiness. In this regard, Private Equity represents a good alternative solution providing investment capital. It allows companies to make investments to solidify or improve their position among the competitors on the market. In times where banks and credit institutions exercise restraints, the interest of companies in Private Equity even increases. Nevertheless, particularly in Germany the growing importance of Private Equity is accompanied by great controversy. One group argues that often the Private Equity investors in their function as majority shareholders neglect the sustainable development of their portfolio companies in favor of their temporary value increase. On the other hand numerous studies indicate that companies benefit from Private Equity investments. According to these studies, companies, which have entered cooperation with Private Equity investors, comparatively, display stronger revenue growth and productivity and also generate more jobs.1 In this respect, the quality of the partnership between the portfolio company and the Private Equity investment association is a decisive success factor and must not be underestimated. Private Equity deals only generate win-win-situations if both parties are professionally engaged. Lack of preparation can either lead to a one-sided relationship - leaving one party at a disadvantage -, or even to a bad overall business, in which both sides incur losses. This paper takes the perspective of each party and points out which specific aspects they have to cons

Kay Müller provides insight into the monitoring activities of private equity fund investors and explores their information requirements. He analyzes the reporting of private equity fund managers, reveals information gaps and provides guidance on how to improve investor relations.

’Private Equity’ is an advanced applied corporate finance book with a mixture of chapters devoted to exploring a range of topics from a private equity investor’s perspective. The goal is to understand why and which practices are likely to deliver sustained profitability in the future. The book is a collection of cases based on actual investment decisions at different stages for process tackled by experienced industry professionals. The majority of the chapters deal with growth equity and buyout investments. However, a range of size targets and investments in different geographical markets are covered as well. These markets include several developed economies and emerging markets like China, Russia, Turkey, Egypt and Argentina. This compilation of cases is rich in institutional details, information about different markets, and segments of the industry as well as different players and their investment practices – it is a unique insight into the key alternative asset class.

Studienarbeit aus dem Jahr 2011 im Fachbereich BWL - Investition und Finanzierung, FOM Essen, Hochschule für Oekonomie & Management gemeinnützige GmbH, Hochschulleitung Essen früher Fachhochschule (-), Veranstaltung: Investment & Controlling, Sprache: Deutsch, Abstract: The majority of companies are in need of investment capital to pursue their growth strategies. Also, a large number of companies only display a low equity ratio and as a result possess bad credit worthiness. In this regard, Private Equity represents a good alternative solution providing investment capital. It allows companies to make investments to solidify or improve their position among the competitors on the market. In times where banks and credit institutions exercise restraints, the interest of companies in Private Equity even increases. Nevertheless, particularly in Germany the growing importance of Private Equity is accompanied by great controversy. One group argues that often the Private Equity investors in their function as majority shareholders neglect the sustainable development of their portfolio companies in favor of their temporary value increase. On the other hand numerous studies indicate that companies benefit from Private Equity investments. According to these studies, companies, which have entered cooperation with Private Equity investors, comparatively, display stronger revenue growth and productivity and also generate more jobs.1 In this respect, the quality of the partnership between the portfolio company and the Private Equity investment association is a decisive success factor and must not be underestimated. Private Equity deals only generate win-win-situations if both parties are professionally engaged. Lack of preparation can either lead to a one-sided relationship – leaving one party at a disadvantage –, or even to a bad overall business, in which both sides incur losses. This paper takes the perspective of each party and points out which specific aspects they have to consider in order having good chances of benefiting from a Private Equity deal. This leads to the analysis of several critical stages within the investment process: investment stages in general, transaction process, due diligence, business valuation and exit. Prior the meaning, history and significance of Private Equity are described.

Explanations to the inner workings of one of the least understood, but arguably most important, areas of business finance is offered to readers in this engaging volume: venture capital. Venture capitalists provide necessary investment to seed (or startup) companies, but the startup is only the beginning, there is much more to be explored. These savvy investors help guide young entrepreneurs, who likely have little experience, to turn their businesses into the Googles, Facebooks, and Groupons of the world. This book explains the often-complex methods venture capitalists use to value companies and to get the most return on their investments, or ROI. This book is a must-have for any reader interested in the business world.

Studienarbeit aus dem Jahr 2010 im Fachbereich BWL - Investition und Finanzierung, Note: 2,7, FOM Essen, Hochschule für Oekonomie & Management gemeinnützige GmbH, Hochschulleitung Essen früher Fachhochschule, Veranstaltung: Investment and Controlling, Sprache: Deutsch, Abstract: This assignment is part of the MBA studies at the University of Applied Science in Essen (FOM, Hochschule für Oekonomie, Essen) and covers the subject "International Finance and Controlling". The objective of this assignment was a critical analysis of Private Equity (PE) investments both from the perspectives of PE investors and of PE target companies. PE investors expect high returns, but it could be shown by taking independent data into account that it is highly questionable if the returns of PE investments are always higher compared to other forms of investments. Furthermore, there is the risk of a total loss, which is higher for PE investments than other forms of investments, especially due to the information asymmetry between PE investors and PE issuers. Looking at it from the perspective of PE issuers, PE investments inject fresh capital into target companies with often a high percentage of debts. This capital can be used for expansion and innovation. However, PE investors expect high returns and may use assets of the target company to refinance debts which have been taken in order to finance the PE investment. Furthermore, PE companies will gain managerial control within the target company through which decisions are aligned with the objectives of the PE investor. This can also include decisions regarding the future employment situation in the target company. There cannot be an overall statement if PE investments are "good" or "bad" for both sides, because the outcome of an evaluation strongly depends on the statistical method, the observed time span, the choice of statistical data and the personal viewpoint.