There are several private companies all over the world, offering basic goods and services to people. The cost of operating these huge companies is quite high, which is the significant reasons that they take financial help from private-equity firms. Private equity firm is a firm which raises funds for private companies from prominent investors and institutions in the private market.
All the private equity funds are managed by fund managers, and they are responsible for all the tasks from approaching the investors to exiting portfolio companies. They manage the daily private equity funds; that’s why they are called general partners. Investors of PE funds are termed as limited partners. Limited partners own around 99% of the shares, and the rest 1% is owned by the general partners.
Private equity is an excellent option for private companies to raise capital as it is far way better than taking a loan from the bank and pay a high-interest rate on it. If you want to understand the working of private equity funds, then you need to know about the different types of private equity funds mentioned below.
Distressed private equity funds
Investing in these types of funds are also termed as vulture financing as these funds are used for poor companies which are unable to perform well in the market. These companies require funds to make the required changes in their management and operations, and for that, they rely on distressed funding. Numerous private equity firms have started distressed funding after the 2008 crisis as it made even the top companies face financial issues.
Leveraged buyouts
It is one of the most useful types of private equity funds as it refers to buying the whole company with an objective to improve its structure and boost the business. If you want to gain more knowledge about it, then you must visit https://nyppex.com/. There are several private companies on which the private equity firms keep an eye and raise funds to take them over. It provides the company with enough fund to make massive changes such as changing the management team, which helps it in growing.
Venture capital funding
It is another type of private equity funding in which the investors provide funds to entrepreneur and help them to set up their business. There are different forms of venture capital depending on the what stage it is offered. For instance, if the funds are invested by the investors to turn an idea into the final product, then it is termed as seed financing. If it is done to boost the business, then it is considered as early-stage financing.
Nyppex Private Markets 