Mitt Romney’s presidential campaign has turned a negative spotlight on private equity. But PE is a much needed solution to a void in the marketplace.
Imagine starting a business, growing it successfully over 5, 10, 15 years, and then reaching the stage where you need a partner to provide capital and help the company continue to grow. You might want to get some well-earned liquidity yet still retain some equity in the business to stay invested in the future. Debt financing may not be practical for you, as banks often require personal guarantees from entrepreneurs. This common scenario is where private equity can play a vital role.
Private equity brings a huge amount of capital to businesses that otherwise might not have the resources to grow, or to a marketplace that otherwise might not be able to fulfill the objectives of shareholders. Businesses, whether distressed or growing, often reach an inflection point where additional capital can serve a crucial need to either save the business or take it to the next level.
Tags: private equity