A private equity fund raises capital from institutional and private investors. Banking foundations, pension funds and wealthy individuals are subscribers to these funds, who typically have 8-9 years of investment cycles.
With the funds collected, which usually vary between 50 in Italy and € 250 million, the management of the fund invests in companies deemed capable of activating a process of development and increase in value in an optical medium-term time.
Typically, therefore, a fund invests in a company with a view to sell it after 3-4 years. And realize, of course, a significant gain, with rates of return on invested capital of more than 20% per year.
The funds are used for professional managers to manage the acquired companies, or leverage the experience of previous owners, who retain a share of capital to implement their development projects and growth.
The levers used to implement these projects can go through all the business functions. Funds may be used for expansion or improvement of efficiency in production capacity, diversification of the matrix product / market, even on an international scale, or, more simply, the acquisition could lead to cutting costs and streamlining the structure. Sometimes the funds buy a company and use it as a platform for further acquisitions in the reference field or in areas where synergies can be achieved.
The Italian economy as a whole is tied to the fate of small and medium-sized. These companies have a turnover between two and two hundred million euro, are often family owned and operated. The economic well-being of millions of families, therefore, depends on the model of economic activity, which is typical of our country and derives from a class of entrepreneurs who, having started their business after the war, are now faced with the problem of generational change .
Many small and medium-sized companies, in fact, can not ” pass from father to son : the second generation often deal with the other, and they lack the right attitude to lead a company. Here it becomes necessary to transfer the company, so as to allow the founder to capitalize on a life of work, and the company itself to ensure the continued operation and investment.
The market for the transfer of ownership of firms and then purchase a great value not only economic but also social, capable of disrupting the lives of workers, families and entire business districts.
Being employed by a company that was sold, quite simply, it opens a series of questions about the future of their professional role, and the evolution of their income on a number of aspects of professional life in broader ways.
The classic example concerns the transfer of a foreign multinational . This step often leads to job losses for a range of functions that are replicated at the buying company (typically those with the lowest administrative strategic importance such as accounting, taxation, treasury, management of payroll), or about downsizing the sales force or some production departments. The acquisitions, in fact, are made to aggregate revenues and reduce the incidence of fixed costs. The functions associated with these fixed costs can therefore become the subject of cuts.
Also this example, which is typical and was the only possible up to some ‘years ago – before the advent of investment funds – contains hints of potential interest to some functions that are able to communicate in most business environments evolved. The mastery of English, for example, often save their jobs and make a difference in the event of amalgamation of the company in a multinational context. Another feature that is protected, if well covered, involves the monitoring of management, along with all the features that make the distinctive competence of the transaction , such as specialized production, design, marketing evolved .
No buyers would find themselves without the ability to control the details of costs and revenues, as well as investment and cash flows of a company recently acquired, or would lose the market by cutting a modern and efficient sales force.
It is clear, therefore, the importance of this market: whether the company with which you work (or who is responsible or who is among the customers) may be object of a takeover is one of the first steps to see if it is linked to a thriving economic reality and the high potential. Contrary to popular belief, in fact, in most cases are the companies that fit that affecting the market.
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