Different approaches for investment in Private Equity

Private equity is the capital of a company that is not for sale for general public at stock exchange. Equity securities are privately owned by the owner(S) of the company and they are not publicly traded. Investment in Private equity often involves huge amounts, which is why normally investment organizations like investment banks or mutual funds carry out these investments as an entity. Private equity investors often acquire a company, even if they don’t get the complete ownership of the company, they still hold enough shares to be actively involved in the management and company decisions. That’s the key thing about holding private equity, that you can be instrumental in the company decisions.

Leveraged Buyouts:
The most common investment made in private equity is a leveraged buyout, in which the investor acquires considerably large number of shares in some company, with an amount that is mostly borrowed from small investors. The investor in this case can be some private equity firm or even the manager of the company (who will purchase private equity to have power over the business that he/she has been managing so Far. It is also known as management buyouts. A rarity in the past, leveraged buyouts occurs quite often now days, as more and more institutional investors raise funds to purchase the majority of shares in some operating business. These investing companies then take drastic steps to improve the performance of the business after acquiring control over the business, however leveraged buyouts are not always successful and collapse as often as other businesses.

Distressed Securities:
Any kind of investment in a bankrupt company (or a company that is about to go bankrupt) is called distressed investment (so it’s not the investor who is making some distressed investment decision). These securities are often valued at a lower price than the original value. By nature, it is a risky investment; therefore it has to be handled by experienced investors and not the starters.

Investing as Venture Capital:
Venture Capitals are raised to support big business start ups, Venture Capital is a pool of cash that goes around looking for entrepreneurs with sound business ideas. Entrepreneurs have to rely on Venture Capital when the required amount for start up is too large to be raised by any other mean. Though it means less control for entrepreneurs, still it helps them getting started and executing the idea that has been haunting them for some time.

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Which business structure is best for your small business?

There are basically three types of business structures (or forms of ownerships) to start with, and if you are looking to commence a business, you need to study all of them in detail as they are not just different methods to manage a business. Business structure actually plays an important role in many ways. For example, cost of starting and then maintaining a business varies with different structures; then you have this very important objective of minimizing tax payable, another decisive perspective can be the liability factor. You can change the structure in future (e.g. getting into a partnership from operating as a sole proprietor) but it's better to start from the right one, instead of going through the change process later on.

Sole Proprietorship:
The most basic form of small business, where one man starts, manages and owns a business. There's no or minimum start up costs involved, you are the sole possessor of your business and all its assets. However, this sole ownership comes with unlimited liability, which means even your personal assets are at risk in case something goes wrong and a suit is filed against your business. As a sole proprietor, you are responsible to pay income tax on your profits. Apart from the unlimited liability part, sole proprietorship is the most convenient way to start a small business, for example consultancy services, real estate agent, retail store, etc.

Partnership or Joint Venture:
Another very simple form of business structure is known as partnership; in which two or more persons join hands to establish and manage the business. Profit, loss and liabilities are equally divided between all partners (or as per the agreement). Taxation liabilities are same as sole proprietorship, as partners are required to pay taxes on their share of profits, in individual capacity. Just like sole proprietorship, your personal assets are not protected as each partner carries unlimited liability (unless some of them are mentioned as limited partners in the agreement). Partnership can also result in some disputes or personality clashes if all members are fixed at running the business in their own way. Partnership helps two or more people to combine their finances and expertise to form a more competitive business when compared to sole proprietorship.

Limited Liability Company:
Limited Liability Company has characteristics of multiple business structures; it offers tax advantage similar to partnership, while precluding the unlimited liability. Limited Liability Company functions like corporations except that they are not required to offer company shares in stock exchange. Even though the cost of maintenance or establishing a Limited Liability Company is higher than partnerships or sole proprietorships, many smart entrepreneurs still prefer this business structure just because of limited liability clause.

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Checklist for organizing successful meetings

Company meetings are meant to be highly informative, problem-solving and solution-providing events, however most of the times these meetings end without accomplishing any of these targets. That is why many people consider these meetings as a waste of time, for them participating in the meeting is nothing but an obligation that doesn't make any sense to them. For all these reasons, as a chairperson or someone who's looking into the task of organizing a company meeting, you need to take care of these points, in order to turn it into a constructive and valuable experience for participants.

Purpose of the meeting:

As earlier mentioned, all meetings are supposed to have a clear purpose; these are not mere gatherings where some employees spend some time sitting around the table and crack jokes at each other. For example, some meetings are meant for informational objectives like holding a meeting to explain some policy that has recently being implemented, or to pass out instructions for the use of some newly introduced technology. Another likely purpose could be to analyze or get to the bottom of some problem. The person who is named as the chairperson must have an unmistakable idea on what the meeting is all about.

Choosing the participants:

Preferably, a meeting should be having a small number of participants; however that doesn't mean some persons who are closely linked to the meeting agenda are left out just for the sake of having the least possible partakers. Choose the participants according to the nature of meeting; if the meeting has been conducted for instructive purpose, it's quite obvious that you must have an expert speaker who'll brief the participants on that particular topic. If the meeting is taking place because a problem has occurred and some kind of brainstorming is needed, it's better to have managers or representatives from all departments.

Controlling the discussion:

If you are chairing the meeting, your role is of utmost significance. First thing first, don't try to get overly authoritative, that will discourage free flow of information and ideas, once you have started the discussion, encourage everyone to take part, don't impose your ideas on anybody, during the discussion your main role is to keep the dialogue on track. Settle down the situation if participants are getting excessively aggressive, rude or emotional. Once everybody has shared his/her opinions with the group members, it's now your turn to evaluate and come up with conclusions, which will be based on the discussion and everybody's opinion. Last but not the least, prepare the minutes of the meeting and forward the detailed report to higher management.