Private equity, or investment capital in Spanish , is a form of business financing aimed primarily at companies that already have a long track record and that at a specific time need to transfer their shares. Below we will tell you in more detail what private equity consists of .
Definition of private equity
Private equity is a form of financing based on a private equity firm purchasing the majority of shares in a company , thereby becoming its majority shareholder.
Private equity occurs in a variety of situations, but the most common is when one or more shareholders of a company want to get rid of their shares. The private equity firm does not usually keep ownership of the shares forever, but rather keeps them until it makes a profit on them.
The terms private equity and venture capital are azerbaijan number data often confused , but they are two very different forms of financing. Private equity firms buy shares in all types of businesses, while venture capital firms focus their investments on companies in the technology sector . In addition, companies that are dedicated to private equity usually make much larger investments than venture capital companies, sometimes buying up to 100% of a company's shares.
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For companies that decide to sell their shares to a private equity firm, there are not only economic advantages, but they also benefit from the management experience of the investment capital firm that can participate in the daily activity of the business and even facilitate relations with banks, suppliers and even customers.
In short, private equity is based on companies with great purchasing power that buy the shares of other companies that are already consolidated or in the process of growth in order to make decisions about them and, in addition, obtain a high profit from their shares.
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