Private Equity Flashcards
example of huge private companies
IKEA
ALDI
LIDL
Dunnes Stores
Examples of companies that were publicly listed and then became private
what type of companies do angel/seed investors invest in
so early stage that they may be pre revenue or with few customers
what type of companies do venture capital firms invest in
those with a sizable and rapidly growing customer base with a revenue strategy
what type of companies do private equity firms invest in
companies with stable cash flows who are able to service a significant amount of debt
ways start ups get funding
- Personal savings
- Love Money (3 Fs)
- Government grants eg LEO
- Incubators eg Tangent
- Angels
- Crowd funding
- Bank loans
benefits of being a private company
aren’t subject to as much regulation or scrutiny
why might a company decide to go public (IPO)
it becomes easier to raise capital
some CEOs do it for status
some managers do it to cash out
what is management buyout in venture capital
rather than IPOing the management of the private equity firm buy out and take control of the company
issue with venture capital
investors tend to be very involved in the management decisions of the company
this may not be what CEO expected or they may not be taking the direction they intended
what is a leveraged buy out
acquisition of a company using debt to finance a large portion of the purchase price
the company is no longer traded on the open market
advantages of private equity
- less regulation
- CEOs have more time and flexibility
- less shareholders to satisfy
- executives can be compensated more easily to align with certain KPIs
disadvantages of investing in private equiy
- less liquid
- lack of transparency
- lack of data and regulation
