Criteria for Private Equity Investments
In simple terms private equity is an asset class where the focus is to acquire a substantial stake in unlisted companies. Using a combination of improved business operations and financial reengineering, the investors aim to exit their stakes at large profits in a span of three to five years. Most private equity groups aim to achieve return on investments ranging between twenty and thirty per cent per annum. A majority of these funds like Monument Capital Group Holdings focus on specific sectors; however some of these may be indifferent and will invest in any company with growth potential irrespective of the sector and industry.
If your business is suitable for private equity investments, there are a few criteria that are evaluated by the PEGs before investing any money. Most of the investors require strong management teams unless the purpose is transition to a new team. Private equity groups like Monument Capital Group give a lot of importance to the quality of the management team. Such investors prefer investing in growth sectors where the company they are investing is in a situation that enables it to achieve good market share within the industry.
Many business owners try giving very optimistic projections to attract equity investors. However, providing a realistic business plan that is acceptable to the PEGs without being too simplistic is important.
Many business owners try giving very optimistic projections to attract equity investors. However, providing a realistic business plan that is acceptable to the PEGs without being too simplistic is important.
One crucial factor that is considered by private equity investors is the exit route, which could be a sale, initial public offering, management buyout, or any other workable option. Debt requires hard assets to be offered as collateral, which is not required by PEGs. Nonetheless, they need board seat/s and a codified business plan from the management to protect their investments. Several investments like http://www.huffingtonpost.com/shane-paul-neil/big-data-bigger-breaches-_b_6109928.html enable companies to achieve large growths that would otherwise not have been possible for the businesses.