Private equity firms play a major role in providing services to small, medium-sized, and large businesses. An equity firm can contain several investors. These investors will use their resources to invest in companies directly or buy companies. According to the Private Equity Growth Council, there are 2,670 equity firms located in the United States and they employ 8.1 million workers. These firms provide cash, they help failing companies, and they invest in new technology for businesses.
First, equity firms provide cash for many types of businesses. A company needs cash to operate. For example, you own an office cleaning business. Your business is growing and you need cash to hire more workers. An equity firm will give your company cash. On the other hand, they expect to receive a return on their investment in your company. You might agree to give them part ownership or share a percentage of the revenues with the investment company. This is one way the equity firms help businesses.
Next, equity firms help millions of failing companies. When companies are about to sink, they sometimes ask equity investment companies for help. This can be a very difficult process for the investors and the business owners. For instance, the investor(s) might try to buy the company or bring in a new management team. The owners have creditors they need to pay. Without the cash from the equity firm, the business might have to close its doors and the employees will lose their jobs. A good equity firm will work out a plan that will make the owners and the employees happy.
Then, equity firms invest in new technology. In the business world, their is a lot of competition. The competitors are located in many parts of the world. A medical device company in US needs better technology and machinery to compete with cheap products imported from China and Japan. The medical device company can combat the problem by asking an equity firm for assistance. The equity firm can buy the technology and the machinery at a lower price and sell it to the medical device company at a higher price with better terms and conditions. This is how equity firms make money and help companies in the process.
Finally, equity firms provide cash, they help failing companies, and they invest in new technology for businesses. These firms invest in restaurants, grocery stores, hospitals, schools, banks, retail stores, and many other businesses. The bottom line tells us that private equity firms can help businesses succeed.
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This video demonstrates how private equity drives economic growth, strengthens business and provides financial security to millions of Americans.