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Private Equity Law


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Private Equity Law

Well, with the Indian Economy booming, the fact cannot be denied that private equity has played a dominant role to make this miracle. With an increasing number of global players and local funds in the past few years, there has been a massive change in the activities of the private equity. Private equity companies not only add to the finance of the country, but then at the same time also add value as and when needed in various domains including human capital, operational and strategic matters.

On the other hand, private equity fund expects to get some profitable returns from any investment. Not only this, it also expects to get a capital increment within a time span of seven to ten years. During the late 90s, the chief focus of the private equity firms was in the IT sector. But then with recession pouring in, it shifted its base in other domains such as media, entertainment and pharmaceutical.

Let us now take a look at the various stages of business in the private equity sector.

  • In the step, the private equity players practically invest to research business data and at the same time develop prototype.
  • Popularly referred to as the start up stage financing, this phase usually lasts up to six months to three years. At this point of time, the equity players invest in legal entity with market and business plan.
  • This stage usually comes after a person has established his business for more than three years. Here the equity players invest in expanding the business to a further extent.

Private Equity Classification

Till now, we did take a look at the venture capital phases starting from the seed stage; start up stage and extending up to the expansion stage and replacement capital stage. Now, let us focus on the buy out policies:

  • There is investment is primarily in the form of equity, debt or quasi-equity so as to get holds of another firm.
  • When you acquire some other company and that too using a viable amount of borrowed money so as to meet the expenses of acquisition.
  • There is investment that is offered to the management authority for getting hold of a company or more specifically a particular division or product line. This is referred to as management buyout.

In addition to those included above, there are some special cases as well where you need to focus on. These include:

  • There are various types of finances often referred to as a blend of debt and equity financing, which is characteristically used to sponsor the development of existing firms. In simple words, it can be explained as debt capital which gives the lender the rights to adapt to an ownership or equity interest in the organization.
  • There are types of investment offered to legal entity that needs to cope up with financial distress.

But then, if you are going in for private equity firms, then some of the barriers that you are likely to come by include management related problems, issues associated with fiscal, various competitions and other ethical issues.

So, what are you waiting for? Hire the services of a private equity firm and add to the value of the nationís economy.

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