Finance Articles

The many advantages of private equity investments sometimes escape the ears of small or medium business owners. Yet capital investment is an attractive and advantageous source of financing.

Nearly 5000 companies are currently benefiting from capital investment in France. Yet entrepreneurs still reluctant to use them, for lack knowledge on these mechanisms or for fear of losing control of their business.

Are Private Equity and venture capital the same then?

Yes, it does. Private equity can be invested mostly in four ways. One of them is Venture Capital. In this line, private equity can be invested on businesses that are starting, those that are mature, or those that are in trouble. Venture capital, growth capital, leveraged buyouts help companies during their cycle of life.

What is the attractive in investing on other businesses for a private equity investor?

During the life of a business, funding is needed to make the business flourish. Moving it forward at the beginning and developing it when it is mature. In any of those cases, private equity investments are a great relief to the finances of small business. The business owner does not need to ask for a credit and it can potentially attract more financing in the future.

Can the private equity investor become another partner?

Investors provide funding for the business but in most cases they have no interest of staying for more than it is necessary to get their profits back. The capital investor, as opposed to a regular investor, thinks about the future of the company rather than the about the short term.

The principle is the same every time: private equity investor enters the capital of the company for a specified period, usually three to seven years. The deadline is not fixed in advance. This equity participation varies widely depending on the project. During this period, the private equity investor may receive dividends in the same way as all other shareholders. But he or she will make profits through the resale of the shares.