commercial law principles Flashcards
what is a private equity firm?
this is a type of firm that generally invests in target businesses that have high growth potential, then work with those businesses and their management to increase their value- over a period that typically lasts 3-7 years, before exiting for hopefully, a big profit
what are some affiliated investment strategies that private equity firms use and what do they mean?
leveraged buyout- A leveraged buyout is one company’s acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition
venture capital- is a type of financing that investors provide to startup companies and small businesses that are believed to have long term growth potential
growth capital- increase in the value of an asset or investment over time
what are some examples of private equity firms?
Blackstone group
Apollo global management
what is management buy-in?
A management buy-in (MBI) is a corporate action in which an outside manager or management team purchases a controlling ownership stake in an outside company and replaces its existing management team. This type of action can occur when a company appears to be undervalued, poorly managed, or requires succession
what is a management buy-out?
A management buyout (MBO) is a transaction where a company’s management team purchases the assets and operations of the business they manage. A management buyout is appealing to professional managers because of the greater potential rewards and control from being owners of the business rather than employees
usually take 6 months
what is a famous example of a management buy-in?
Newark-based ambulance service B.N. Gibson – one of the longest established private ambulance providers in the UK – has been sold in a management buy-in (MBI).
what is a famous example of a management buy-out?
2013, when Michael Dell, founder of the eponymous computer company, paid $25 billion to take it private, with the help of a private equity firm
what is the main difference between venture capital vs private equity firms?
venture- tend to focus on an earlier stage invest business and invest in small equity stakes
private- typically invest in more mature businesses and often invest in much larger stakes, using a combination of cash and debt
