Private equity law encompasses private equity companies that pool investments of pension funds and other large investors to buy assets and other firms.
A private equity attorney will assist in forming the funds and negotiating the terms of the contracts. In the US, the private equity industry began in 1946 when two venture capital companies were founded.
In terms of finance, private equity refers to a category of assets comprising equity securities and debt in operating companies that are not publicly traded on stock exchanges. Private equity firms, venture capital firms, or angel investors typically make private equity investments.
Each type of investor offers private equity funding for distinct reasons. However, all offer working capital to a business for the purposes of expansion, development of a new product, or a restructuring of the firm’s operations, management, and/or ownership.
Leveraged buyouts, venture or growth capital, and mezzanine capital are among the most common investment approaches in private equity investing.
Attorneys at SBEMP (Slovak, Baron, Empey, Murphy & Pinkney) law firm provides professional legal advice and services to clients in Palm Springs, Palm Desert, Rancho Mirage, Inland Empire, Orange County, Coachella Valley, Costa Mesa, San Diego, New Jersey, New York, and surrounding communities.
An average leveraged buyout transaction involves a private equity company purchasing majority control for an existing or mature firm. The companies that are involved in these transactions are usually mature and produce operating cash flows.
Venture or Growth Capital Investment
Investors invest in young, evolving, or growing firms, rarely seeking to acquire majority control.
While venture and growth capital are similar, the companies that seek growth capital are usually more mature in comparison to venture capital-funded companies, able to produce revenue and operating profits but not able to produce adequate cash to fund significant expansions, acquisitions, or other investments.
Mezzanine capital is preferred equity securities or subordinated debt that are typically the most junior portion of a company’s capital structure, but still superior compared to the common equity of the company.
In general, mezzanine capital is typically used by smaller firms to enable them to borrow additional capital beyond the amounts that traditional lenders would be willing to offer through bank loans.
ABA – Committee on Private Equity and Venture Capital
The Committee on Private Equity and Venture Capital focus on matters affecting the United States and international attorneys who form and represent private equity and venture capital funds and those who advise business owners and firms seeking financing from those sources.
The Committee concerns itself with securities, corporate, tax, intellectual property, regulatory, and other issues of private equity and venture capital communities, pertaining to both investments by funds and the formation of funds.
Private Fund Transparency Act
A bill to require investment advisors to private funds, including private equity funds, hedge funds, venture capital funds, and others to register with the Securities and Exchange Commission, and for other purposes.
Securities and Exchange Commission (SEC)
The US Securities and Exchange Commission aims to protect investors, maintain efficient, orderly, and fair markets, and encourage capital formation. Today, an increasing number of first-time investors are turning to the markets to help secure their futures, send children to college, and pay for homes, and this makes the SEC’s mission more compelling than ever before.
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