Family companies benefit from private equity Gottingen, April 11, 2008 more and more family companies benefit from financing by private equity. However, the potential of this type of capital is not far from exhausted too often outweigh concerns about the industry. When family business recorded increased capital requirements, the first way still to the Bank. But this way burden the balance sheet significantly and may result in high interest costs. Not only because more and more entrepreneurs also rely on other financing through the equity or quasi-equity procure themselves. Minority participation by private equity investor is just one of the opportunities is a way the minority participation by a private-equity investor. The company leads to real equity. Contrary to often-guided reservations, the investment manager of a recent study of the technical show University of Munich according to very cautious, if it about the influence on management decisions.
The overwhelmingly large part of the family business owners who have had experiences with private-equity firms, expressed positive about the behavior of the new shareholder. Entrepreneurs also benefit from the expertise of lenders so stated the respondent family entrepreneurial, to have benefited, but especially by the fact that they had to put off the non-family shareholders accountable about the company’s success not only by the effect of financing. This have impacted positively on the decision-making Executive Board. At the same time, almost no negative effects were criticized by excessive influence on the operative business. The profitability development of companies within the holding period was mostly classified as good or very good.
The minority stake is the exception but especially in family-run businesses. Most owners families have no interest in family-foreign investors to expand the circle of shareholders. They fear no longer to be Lord in our own House and the corporate culture under the influence of foreign partners do not keep. Mezzanine financing solution – example certificates a change of in shareholder structure financial expert of the law firm Gundel & Reddy Kadiri from Gottingen is however not necessary, as Matthias Gundel, white: experience has shown that mezzanine finance, about the issue of participatory rights, usually rather the needs of medium-sized family-owned company. Also in this way is due to capital company, that can be accounted for as equity.” For this kind of funding, no change of the shareholder circle is required, so that no voice and direction powers must be given to the unitholders. Certificates enable tailor-made financing investors receive for providing of capital dividends based on the profit of the company, similar to a stock. Nevertheless, enjoy rights less heavily regulated. “Gadre said: a wealth of design options that allow us, giving conditions to the needs of each individual company to adapt and each of our clients is the issuer of participatory rights tailor-made for him ‘ solution to offer.” So about the distribution mode, the tax and accounting conception the tradability of issued rights can according to the wishes of the respective entrepreneur are designed or negotiated between him and the investor.