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Small Business

Investing In Private Companies

Private Equity Investing

With the ease of access to information, today it is much easier to gain the financial knowledge required for sound investments. Gone are the days when investment are only made through fancy brick, and mortar institutions and only the investment in public ventures are considered a safe and reliable investment option.

Nowadays it is equally safe and profitable to invest in a private company as it used to be in public enterprises.

With arising financial pressure to perform, complications and scandals relevant to public companies, some investors are of the view that private companies are more genuine and honest.

But before getting into the complexities, it is essential to know about the types of private companies today’s investors are participating.

Types of Private Companies

The type of a private company is defined by its development stage. First of all, comes the stage of angel investing or angel firm. At this point in time, the business is just starting. This stage is known as angel investing because the entrepreneur has arranged funds from his resources. The second stage is venture capital, at this point, it is assumed that business has long-term potential to some extent. Due to this fact, a relatively experienced group of people offer capital for the business along with knowledge regarding the operations and management of the business.

The next stage is known as the mezzanine stage, at this stage the business is introduced to the dynamics of the equity and debt and in case the company defaults on its interest payments, then it will also turn into equity.

Investing in Private Companies

While investing in a company, it is necessary to consider the stage or type of the private company, since each stage offers a different set of risks and rewards. Therefore, the investor should invest according to his risk and reward appetite.

Investing in an angel firm offers the highest amount of reward, but it also involves the greatest amount of risk. At this stage, the business is just getting started, and there is a substantial amount of risk it will not be successful, but if does, it can offer the highest possible amount of profit for the investor.

Many considerations are taken into account by the investor like the direction of that specific industry, management, and use of funds.

Now considering the second stage, that is venture capital stage. At this point, there are fewer chances that the business will fail because now a higher amount of capital and business knowledge is involved. This is also the relatively common option available for investing which also has the potential of reaping higher level of profits.

When the business is at the mezzanine stage, usually financial institutions jump in and support the business because at this level business is established to a great extent. Therefore, financial institutions see the window of opportunity and try to benefit from that. Though individual investors can also invest at this stage, businesses prefer financial institutions because they can sometimes offer a higher level of flexibility and/or better terms and conditions.

At the last stage, a company is equivalent to a public company. All of its functions are same as of a public company. This stage offers the least amount of risk, but this factor also reduces the level of rewards as well. But still, this is a great option for investment purposes.

Benefits of Investing in a Private Company

There are several benefits of investing in a private company, some of them are highlighted as follows:

In the past, it was believed that public enterprises perform better than private companies. This fact can be negated with the help of some recent data;

PE-private-equity001

This indicates that investing in private equity is a better bet compared to the investment made in a same publically traded company.

The trend of private corporations performing better than the public companies is more pronounced when considering the investment in lower and middle market private equity as indicated below:

lower and middle market private equity

This change of trend can be attributed to the fact that private companies are relatively young in nature and they are growing. Therefore, there are things that they have yet to explore or incorporate in their business. This allows them to generate the higher level of returns with the higher level of risk involved as well.

Secondly, private companies are more than likely to invest towards their growth and are more sensitive to the investment opportunity coming their way. These dynamics of the private company make them capable of providing a highest possible return on the investment.

Thirdly, more than likely a private company is a tightly run business. This kind of structure is very successful in the business arena because they have a perspective that is long-term. When business management has a clear and concise long-term plan then it is more than likely, that such company will outperform its other counterparts which are in public sector.

Doing what’s easy is not always the best direction with investment money. Nowadays investing in a private company is easy, but still not as easy as investing in a public company.

However, it is quickly becoming common practice by many high net worth investors to add private companies into their investment portfolio with the help of pooled investment options available in the market.

Investment in private companies through this method allows the investor to reap the same kind of benefits that are being offered by a mutual fund based on the public companies. Under this method, investors receive units, which is equivalent to owning shares of a publically traded company. Then using these units investors carry out their investment activities. In most of the cases, these pooled investment instruments are focused towards the companies which are in their earliest developmental stages. But there is no limitation to that; there are also well-established private companies are available for the investors who are risk-averse.

When investing in a private company, it provides the investor a certain kind of control and can give authority over the firm. This is referred as the control investing. Control investing provides the investor with the substantial amount of control that can be used for influencing management style, a way of doing business, operations of the business and many other aspects. This provides a better level of accountability in the business along with the value creation at the optimal level. There are some cases where control investing allows the investor even to have the authority to remove or change the CEO and management.

While conducting business, the risk mitigation factor is usually undervalued. This aspect is left to be on the need basis; this implies that its risk should be dealt with when it arises. This is an ultimate strategy for business failure because when risk arises, it is usually too late to deal with. The optimum strategy is to mitigate the risk before it even arises and there should be a concise and definite plan about how to deal with a risk when it arises. When the investors invest, then this aspect of the business was catered by them to a great extent. This is because, when investors’ money is at stake, they are on the lookout for the risk. They sense it before it arises and try to avoid it at all the possible cost. This phenomenon becomes all the more efficient and effective if the investment made by the investors provide them some kind of control and authority over the business. Therefore, it is also in the interest of the private companies to have some external investors because this allows them to run their business efficiently and effectively.

Things to Consider

There are certain things that any investor should keep in mind before investing in a private company.

First, private companies are relatively not liquid compared to public companies. Also, the investment horizon involved in investment with private companies is long-term. Therefore it is not possible for the investor to cash out of the business when he wants, but they have to wait for such event to take place. For example when a company goes public or when it buys its private shareholders or worst case scenario when another firm is purchasing the business. Moreover, an investor should also keep in mind that private companies are valued like any other security on a regular basis. This is to determine either the company is undervalued, overvalued or fairly valued.

All of these facts make investing in private enterprises a highly profitable game. Investors that have the financial muscle to deal with the risky and illiquid nature of a private growing company.

Follow on LinkedIn Rodney Gray

Reference:

http://www.investopedia.com/articles/basics/11/investing-in-private-companies.asp

http://www.marketwatch.com/story/how-to-invest-in-the-trump-era-buy-shares-of-private-companies-2017-01-31

http://www.newworldcapital.net/wp-content/uploads/2014/03/The-Pleasures-and-Perils-of-Private-Company-Investing-2-15-14.pdf

Disclaimer: The information provided on this page is for general informational purposes only and not to be considered investment advice. While we try to keep the information up-to-date and correct, there are no representations or warranties, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information contained on QuilPen. Any use of this information is at your own risk.

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5 SОСІАL MЕDІА ADVERTISING METHODS YOU NЕЕD TO DО NОW

QuilPen Articles for Business

Did уоu knоw that online advertising ѕреnd hаѕ ѕurраѕѕеd tеlеvіѕіоn аdvеrtіѕіng?

Whіlе PPC (Pay-per-Click) іѕ a bіg сhunk of this spending, ѕосіаl mеdіа аdvеrtіѕіng іѕ bесоmіng juѕt аѕ important.

If you’re nоt already using social media аdvеrtіѕіng mеthоdѕ tо gаіn nеw followers or mоrе рrоѕресtѕ, thеn thеrе аrе a few tесhnіԛuеѕ уоu need to know.

5 Sосіаl Mеdіа Advеrtіѕіng Mеthоdѕ

  1. Use Ads to Highlight Non-Sales Efforts

Rather than uѕіng ѕосіаl mеdіа to оnlу direct users to уоur various landing раgеѕ, send уоur users to nоn-ѕаlеѕ rеlаtеd раgеѕ too. Fоr еxаmрlе, уоu саn роѕt аdѕ to share уоur сhаrіtаblе еffоrtѕ оr upcoming еvеntѕ.

Mаnу оf thе biggest corporations employ thіѕ method, but it can be just аѕ effective fоr уоur оwn personal brаnd. In doing ѕо, уоu hіghlіght dеtаіlѕ thаt аllоw реорlе to соnnесt wіth you and уоur brаnd on a personal lеvеl.

  1. Use Adѕ tо Enсоurаgе Pаrtісіраtіоn

SocialMediaManagementSolutionsAnоthеr mеthоd іѕ…

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Applying Traditional Advertising Concepts To Online Marketing Is A Big Mistake

Traditional advertising typically refers to TV or radio spots, print media, direct mail or telemarketing.

These forms of advertising are usually polished and professional.

Their cost is in both creation and promotion.

Online marketing includes content strategies, social media promotion, email marketing and online ads. Understanding how online marketing works is critical to its success.

Source: Forbes https://www.forbes.com/sites/forbescommunicationscouncil/2017/09/28/applying-traditional-advertising-concepts-to-online-marketing-is-a-big-mistake/#42f535747a2b

CardVerify Helps Eliminate Fraudulent Orders and Chargebacks

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Visit http://www.cardverify.net

Marketing Tools for Nonprofits

Nonprofit organizations generally are master’s of marketing both online and off.

Most Nonprofit organizations marketing methods start with the basics and what fundamentally can produce a return-on-investment month after month.

Nonprofit organizations marketing methods

Challenges facing nonprofit business marketing.

The main goals of any nonprofit organization is to win supporters towards their cause, and to fundamentally convert those supporters to donors, members or customers to support the company.

Social Media

Social media marketing is a necessary foundations to any business but can get very costly to boost ads in a pay for performance marketing environment.

With this type of marketing ,from experience, more content with lower boost budgets tends to work best.

From experience, creating one ad and throwing a ton of money at it can taper off performance fairly quick. The best advice is to get creative and boost the $5 / $10 or $20 ads, this can work quite well and will force you to produce quality ads.

It’s always good to formulate your social media Foundation from a zero-cost perspective at first. Only adding money into boosted ads once your profile and message is clearly published.

Cost effective marketing

Marketing your website’s products and services can be a simple process, when using the proper tools.

The most important part for any business, expecially non profit is to have low-cost marketing that works.

Email list marketing works. With a newsletter type campaign you will only build your core marketing Foundation bigger and better with each successful campaign sent.

Email marketing has clearly proven to be one of the best-performing marketing tools available to date.

Nothing can beat the cost and control list marketing provides.

Inviting Atmosphere for the Disabled | Michael D Haines

Entrepreneurs making a difference and Changing the World.

A letter was written to Michael D Haines

Dear Michael: I challenged myself recently and landed myself a part-time job at a local Bottle Return-it facility. My doctor had told me for years that because of having been diagnosed with Bipolar Disorder, he said that I would never be able to return to the work force. I have proved him wrong and my new boss says that I’m just as
good as anyone else for the job. I’m fast and efficient for a 51 year old man.

I am very grateful to you for

“your advice to challenge myself. Thank you so much, Mike, for your inspiration. You’re a great man!” ~ James Tobin

View Mikes personal website: http://www.MichaelDHaines.com

Michael’s Mission Statement

I will help you as well your managers and their teams see the world from a totally different perspective. He shows them how to connect more meaningfully with an ever-growing demographic.

Michael D Haines
Michael D Haines Kelowna BC Canada.

Michael will give a brief run down on some stats from Statistics Canada on how consumers with challenges are growing to be a larger segment of your market. Michael also believes that if you alienate a person with a challenge in a given party, that party may consist of six other people. You have lost the chance to serve the other five people in that party as well. “Have you ever calculated the revenue of a customer?”

If you own a pub, that one customer might spend $200.00 per month, and you do the math over the year. Multiply that by six and you will have the kind of damage one untrained person could do to your business.

I have heard some pretty shocking things about customer revenues, and they can be vicious. Give a customer bad service or create a bad experience for him/her and they will tell 25 people about it. Remember our six patrons at your pub, well, if that holds true then you have lost a further one hundred and fifty people visiting your pub. And that is just because your staff was not properly trained in how to provide quality service.

WHY SHOULD BOOK MICHAEL?

Learn more;

THE DISABILITY FALLACY

Michael Haines

In my mind, I do not have a disability, however, society has placed a label on me, and many others, who were born with challenges.

We all have challenges.

Some are more pronounced than others, and I will go further to say that if you don’t have a challenge, you aren’t living the best life that you can live.

All human beings need challenges in order to grow and be better. I will show you how to leverage challenges to make your life or business the best it can be.

Send Press Releases

QuilPen Articles for Business

Apress release plays a crucial role towards an effective marketing strategy for mostly any type of company.

Press releases are an insightful piece of information that improves the media awareness of any company while also allowing for a focus on exciting products or even a new company direction. A press release follows a standard universal format and this makes it easier for readers and publications to get the desired news they need in an efficient manner. The real purpose of a press release is to make media members aware of your news in hopes that they will turn it into a news story and thus spread the word to their army of readers, the public. Press releases can be an extremely effective marketing tool in that they allow companies to strictly control the message being published.

Send Press ReleasesSend Press Releases is a full service press release distribution company. In fact the…

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Why Send A Press Release?

Nothing has the “breaking news” impact like a press release..

A press release is often overlooked by many businesses – however a PR can be one of the best forms of communication you can ever produce about your company’s products or services.

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Press releases guaranteed to go on Google, Yahoo!, Bing, Google News and Bing News; creating an account, and a press release using the editor is easy!

In addition your press release will appear on 150+ newspaper and major news sites including… [more]

What is Artificially Intelligent Marketing (AIM)

AI is generally A New Concept in marketing however can search engines like the organic Google directory be considered artificially intelligent already? I think the answer is yes.

Exactly ‘where does‘ the human element end and-the artificially intelligent element take over when discussing software?

(Wikipedia) has clearly Illustrated the definition: Artificial intelligence marketing or AIM, is a form of direct marketing leveraging database marketing techniques as well as AI concept and model such as machine learning.

AI and email marketing

With modern email platforms Like official email marketing many artificially enhanced marketing functions can be observed already.

Features such as rate-limiting, list segmentation, and pre-delivery spam checker – by spamassassin are all artificially enhanced marketing elements that can easily be added to Your Arsenal through a single dashboard.

The idea is not only to learn from your current marketing campaigns for future success, but to also utilize software that can enhance this capability automatically.

A new study has revealed mostly all businesses are ready for AI marketing.

Image Credit GCN

In fact merging artificially intelligence software with the best performing marketing method online creates one powerful solution for any business.