Question: Explain the impact of private equity firm acquisition of manufacturing and retail firms.
POST 1: Private equity firms are the firms, which provide financial, support in the industries and companies, which are not publicly traded in the market. These private equity firms give loans to the companies who are not capable of so that their business is improved. Some of the companies may be not able to run their business so for them giving such hand is very helpful for them. The main goal these firms are they make sure the company will regain their operations and make sure that they make profits from the company. The private equity firms have a different effect on manufacturing and retail firms. The impacts of manufacturing firms are completely different from the retail form. In the manufacturing firm, it is generally done as a wholesale business whereas in the retail form they have customers who buy their products and they are the actual consumers (Steven, 2014).
A private equity firm takes over a month actually industry then they will make sure that the half month three industry will again come back to its normal state by making high returns. The amount that has been earned by the private equity firm is used to invest in raw materials so that the sale and production of the industry are increased. Once a private equity firm takes over a manufacturing firm then it is their responsibility to make sure that the man factoring firm to make profits and also stand in the market by fighting the competition. They must regain their financial strength and also customers should be built for the company. It is very advantageous for the manufacturing firm to be acquired by a private equity firm because it will help them to increase their reputation in the market as the business grows (Cornell, 2018).
POST 2: Private equity is a method form of financing, where investors invest on companies which are under loss. As the business remains the same, the managements gets changed as a time forth it’s a quite beneficial for the company as it have a regrowth with new projects and funds (Casalino & et al., 2019). This makes earnings by charging fees of performance and management from the investors. Equity firm is way too bring back the business if a company is in loss and some stakeholders put a step forward to invest in the company and take over the company’s management and start reproducing it through their management and performance (Payne, 2011). Moreover, it’s great backup start after a great loss by this procedure the wings of the company move further and different deals and dealers will be assigning the work and projects to the company and this procedure will benefit everyone including investors and company. This private equity firm fear is more in all the public-private company Coe’s, as no one knows which way the storm attacks the market.
Most of the companies expand their expenditures to the rest of company investors and fight back even after a huge lag. This method of expanding business is very enlighten in present days, the private equity firm was established three decades back as it was not that considered as important after World War 2 but in today’s technology, every struggling company is a part of the firm equity system. As every action has a reaction equity firm has some pros and cons, we are beneficiary with high returns of profit and great involvement of dealers (Nielsen & et al., 2017). The disadvantage is about, we are been controlled by someone and the huge part of the equity firm system is a huge amount of share has to be given and there will be a slight difference in values and rules that the company has now and then. Moreover, your company is in the hands of someone whose intentions may not tally your point of view.