Structure of a Private Equity Firm

What Is the Structure of a Private Equity Firm?

Direct investments traditionally belong to the category of alternative investments. Meanwhile, for many developing economies, private equity structures act as a leading source of income, the annual “capacity” of which amounts to hundreds of billions of dollars.

Direct Investments as a Source of Private Equity Firms Financing

For most investment companies and funds, investing in a non-core business is a form of direct investment. In fact, they buy not only and not so much in order to receive part of the current income from owning a stake in the company, but in order to then resell it. Such investments can provide profitability at the level of 50% per annum. Of course, provided that the investment object is chosen adequately.

Many young and stranded companies have been able to raise funds from private sources rather than going public. Some of the big names we know today – for example, Apple – were able to declare themselves on the map thanks to the funds they received from direct investments. On the basis of the income received, the social and economic needs of the labor collective and the owners of the means of production are satisfied.

The structure of private equity firms is the knowledge, skills, and health in which people invest and accumulate over the course of their lives, enabling them to fulfill their potential as useful members of society. Investing in people through improved nutrition, health care, quality education, job creation, and skills training contributes to human capital development, which is key to eradicating extreme poverty and building more socially cohesive societies.

Direct investments in private equity firm financing occur when a resident unit in one country makes investments that provide it with a significant degree of influence over the management of an enterprise that is resident in another country. In practice, this concept means that a direct investor owns equity instruments that provide it with 10 percent or more of the voting power in a private equity venture.

What Are the Private Equity Targets?

The main private equity targets are to achieve the results that are expected to be obtained within the planning period. They are determined by the interests of the owner, the size of capital, the situation within the enterprise, and the external environment. The right to set a task for the personnel of the enterprise remains with the owner, regardless of his status (private person, government agencies, or shareholders).

The main private equity targets include to:

  • Win or retain a large share of any market for your product.
  • Achieve a higher quality of your product.
  • Lead the industry in technology.
  • Maximize the use of available raw materials, human and financial resources.
  • Increase the profitability of your operations.
  • Achieve the highest possible level of employment.

The synergistic effect of a private equity firm’s structure directly depends on the coordination of certain instruments of communication impact, which is determined by the goals of communication, that is, at what stage of decision-making the subjects of promotion are and, accordingly, what communication results must be achieved. At the same time, the main principle when deciding on the use of several tools. In the event that a client takes a long pause in communications or refuses to purchase, the private equity firm returns him to the initial stage of the funnel for re-nurturing. Personalized offers and targeted marketing can help you achieve the desired result.