A private equity law firm can represent your company in raising funding or when it is being bought out. Generally, private equity funding occurs when private equity firms buy: (a) troubled companies with underperforming assets or business units; (b) companies with the intent to improve its operations and reselling it for a profit or exiting through an IPO; (c) shares of start-ups during a round of seed financing. These private equity firms buy these companies or shares using a mix of debt and capital, raising money from institutional and accredited investors who invest in different types of assets. If a private equity firm is interested in purchasing shares of your company, a private equity law firm can advise you on the transaction.
Types of private equity funding
One form of private equity funding is distressed funding where private equity firms purchase troubled companies with a lot of potential. Usually, these troubled companies have valuable assets, such as patents, or underperforming business units due to mismanagement. Private equity firms usually purchase these troubled companies with the exit strategy of managing the company to perform better and later reselling or selling the assets for a profit.
Another form of private equity funding involved leveraged buy-outs. Private equity firms purchase companies with a cash flow using a mix of debt and capital, with debt accounting for 90% of the overall funds. This debt is transferred to the acquired company’s balance sheet and the acquired company’s cash flow is used to pay for the debt that was used to purchase the company. The private equity firm then turns around the company using different strategies such as reducing the number of employees and replacing the entire management team. To exit for a profit, the private equity firm resells it once the company’s financial health has improved or registers it for IPO.
Venture capital is quite popular in start-ups. Here, rounds of seed financing are conducted where angel investors provide capital to the entrepreneurs. These investments are usually given to companies with high growth potential, such as Uber. When Uber launched, it obtained capital from Series A and Series B fundings in order to funds its expansion to different markets.
What can a private equity law firm do for you?
Private equity firms will always try to get the best deal out of their money. It is important to get a strong legal representative to ensure that you, the target, are also getting the best deal out of the transaction.
A private equity law firm will assist and guide you with the structure of the transaction, from reviewing your capital structure, negotiating and drafting acquisition agreements, reviewing financing documents, and advising on tax structures and consequences. Should you need assistance, we, at the law offices of Albert Goodwin, are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at email@example.com.