Private equity is a new alternative structure for company owners to get capital to grow their businesses. Too often, PE is lumped under the umbrella of the huge billion dollar deals which get a great deal of press.
What can be missed is that small companies who have up until recently been ignored by investors, would not have been given the money to grow because of lack of cash. Now, a family owned company can get a new lease on life as they are able to get sophisticated partners to take their business to a new level. Private equity injects small business with growth hormone to make even Sylvestor Stallone jealous. A growth opportunity for privately held companies gives enormous competitive advantage to a country, particularly over the next ten years as Canadian companies go global and need the money to take higher risks. Old style investors would reach for their PASS stamp where private equity investors say OK - let's give this a go. Competitiveness is to be nurtured.
What can be missed is that small companies who have up until recently been ignored by investors, would not have been given the money to grow because of lack of cash. Now, a family owned company can get a new lease on life as they are able to get sophisticated partners to take their business to a new level. Private equity injects small business with growth hormone to make even Sylvestor Stallone jealous. A growth opportunity for privately held companies gives enormous competitive advantage to a country, particularly over the next ten years as Canadian companies go global and need the money to take higher risks. Old style investors would reach for their PASS stamp where private equity investors say OK - let's give this a go. Competitiveness is to be nurtured.
"Increasingly competitiveness is no longer a government driven process, it's a process where government and business and universities and other institutions work together to raise the bar,"
says Michael Porter, top author of strategy and finance books, prof at Harvard.
What I find heartening is seeing the funds in action with the family businesses we have helped grow with private equity financing. I helped find a CFO for a construction firm and I could see directly how having the fund manager also participate in the interviews was fuel in the tank for the owners. Would your bank manager do this for your company? Would your shareholders on the public stock market do this for you? Would your Board members?
This Monday morning, out on the shop floor participation is the secret of how private equity rolls up their sleeves. Their day-to-day work that they add to the company is the magic ingredient in the financial recipe. Those private equity people coming into a business have entrepreneurial energy. It's very hard for outside experts to measure and nearly impossible to understand if you do not have business running through your veins.
What I find heartening is seeing the funds in action with the family businesses we have helped grow with private equity financing. I helped find a CFO for a construction firm and I could see directly how having the fund manager also participate in the interviews was fuel in the tank for the owners. Would your bank manager do this for your company? Would your shareholders on the public stock market do this for you? Would your Board members?
This Monday morning, out on the shop floor participation is the secret of how private equity rolls up their sleeves. Their day-to-day work that they add to the company is the magic ingredient in the financial recipe. Those private equity people coming into a business have entrepreneurial energy. It's very hard for outside experts to measure and nearly impossible to understand if you do not have business running through your veins.
1 comment:
Private equity is a great finance alternative and it is democratizing the business world.
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