When considering non-traditional holdings, one must not discount the vast potential to be realized in private equity investing.
Private equity firms align with private corporations, university endowments, funds of funds, private and public pension funds, and charitable organizations to raise money for acquiring ownership in businesses that, while established, are struggling and can stand to benefit from a cash infusion. Upon purchase, the company is rehabilitated from bottom to top, so that in about four to 10 years’ time and after a notable increase in value, the stake can be sold at a generous profit favoring the original investors.
Similarly, venture capital firms pool together resources from various professional and institutional investors and wealthy individuals alike, in order to procure equity ownership in startups built around innovations in technology, health care, renewable energy, and lifestyle. This growth capital is used to develop the young enterprise in its early stages, helping it get off the ground and find its footing in the industry. When the company reaches a certain level of maturation and bankability, the capitalists can then exit their ownership in exchange for substantial gains.
Though private equity enjoys quite a few key advantages—the long-term absolute returns that are impossible to obtain with IPOs, the low exposure to volatility and inflation, and the high degree of influence stakeholders have over company management are just some of this type of offering’s featured benefits—this investment category is not without its challenges.
But apart from the retrieval and maintenance of adequate capital commitments from its institutional and individual investors, a private equity firm’s main concerns involve the sourcing, orchestrating, and closing of deals and buyouts, portfolio company improvement with an emphasis on lowering costs, enhancing operations, and recalibrating management in order to spur revenue and net earnings growth, and the arrangement of high-paying portfolio company ownership exit.
Fortunately, asset servicing firms can provide any private equity or venture capital firm with all the administration, accounting, tax, and intelligence support it can possibly need, at the quality and velocity that allows its fund managers and partners to focus on soldiering forward and staying ahead of the curve. Leveraging exceptional staff, state-of-the-art cloud-based domestic and international trade market software, ultra efficient data collation and processing techniques, and globally esteemed client care, asset servicing solution providers can deliver with the utmost integrity, accuracy, and speed, ensuring private equity clients the highest of yields, using the industry’s most advanced methods.
