Private equity firms are a special category of investment companies in the world of business and finance. The financial experts of these businesses accumulate money from various sources. These could include wealthy individuals, insurance companies, educational institutions, pension funds, and even endowments. The professionals then invest their stakeholders’ capital in buying or selling start-up companies which exhibit an impressive growth potential. In doing so, financial specialists seek to acquire a stake in the equity capital of such corporate enterprises. They also ensure their investors consistently earn a lucrative return on investment for a period to 5 to 7 years. Then the experts sell their stake in such businesses in return for hefty fee and percentage of profits in such companies.
TitleCard Capital – How do private equity firm invest in upcoming lucrative companies?
TitleCard Capital is a prominent private equity firm in America which invests in start-up companies having a sound business model for growth. Almost all of these businesses operate in sectors such as cutting-edge information technology, healthcare, consumer services, hospitality, specialty finance, and entertainment. The objective of the team of experts of this financial company is to provide value addition to their stakeholders’ investments. They ensure these investors consistently earn lucrative returns on their capital over a period of time. Its founder, Tyler Tysdal, is an MBA graduate from The Harvard Business School with valuable years of experience in finance and investment.
How do private equity firms invest in companies?
The experts of TitleCard Capital say private equity firms invest their stakeholders’ funds in select companies. The professionals of these financial companies look for promising start-up businesses showing good growth potential. They help such corporate enterprises by infusing them with money, introducing innovative processes, strategic growth plans, and the latest technology. In return, the specialists seek a majority stake in such companies so that they have a say in the decision-making process. After a period of 7 years, private equity firms sell their stake in such portfolio companies for a good price. Before doing so, they ensure their investors earn lucrative returns on their capital.
What do private equity firms consider when investing in new companies?
These specialists go on to explain all private equity firms have their own criteria for investing in promising start-up companies. Generally, the professionals of such financial investment companies look into the following three factors which influence their decision to invest in such businesses:
- The private equity firm invests in companies with a good managerial team running its day-to-day activities;
- Such companies should have an ambitious business plan which interests the experts of private equity firms investing in them. The plans should indicate what potential sales and profits are likely to be in coming years; and
- Private equity firms seek to secure seats in the Board of Directors of their portfolio companies. This because these financial companies do not ask for collateral for the sum of money they invest. It ensures the safety of their investments.
The experts in TitleCard Capital clarify that private equity firms are a boon to promising start-up companies with good growth potential. These financial companies provide such businesses with money, new processes, strategic growth plans, and the latest technology. In return, the professionals of private equity funds seek majority stakes in such businesses and offer value addition for their investors.