Private equity is critical in the context of e-governance and big data and is an essential element in government contracting.
Private equity companies are always on the lookout for new opportunities and if you are the owner of a company, you might have received a call from one or two private equity firms. Private equity firms raises money from investors in a fund that usually lasts 10 years which is utilised to procure either a minority or a majority stake in a company. They usually seek companies who have good management teams, operate in growing markets, and who have good upsides. These emerging companies usually lack proper funding to utilise the market opportunities that are ahead of them, which is where private equity comes into play.
The firms provide substantial ROI to their investors in five to seven years either through a total sale of the company or by selling their stake to a strategic or financial buyer. Private equity investors rarely buys 100% of a company but keeps the present management team and enables them to move forward with their future vision of the company – and to scale the business by chasing opportunities that were unreachable earlier. Private equity firms brings in years of combined experience and expertise in the business that they have procured and act as a business partner with some level of involvement – either a board seat or operating agreement provisions.
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