Private Equity Firm Acquisition : Write 300 words on discussion and respond to two articles with 200 words each
1)Write 300 words for discussion with 3 peer reviewed references
Explain the impact of private equity firm acquisition of manufacturing and retail firms.
2) Respond to two articles with 200 words each
In the context of a manufacturing and retail sector, the private equity firm acquisitions of companies have created opportunities to expand the reach of firms by bringing their distribution in different geographies. There are two reasons for the increase in the number of private equity firms. First, the private equity firms focus on the growth and development of companies through acquisition. In addition, private equity firms are the best candidates for this role in that they have a broad range of capabilities as they may have expertise in either growth or development, or they may be able to access capital. In any case, private equity firms focus on making acquisitions (Antoni, 2019).
Private equity (PE) funds have become major players in the global capital markets. In addition to their investment funds, they now sponsor leveraged buyout (LBO) teams. In most jurisdictions, the PE industry in developed countries is a well-regulated sector with a high degree of oversight and regulation by both the government and the private sector. Private equity (PE) is generally defined as the process of selling a business that’s been acquired by one company to another for capital gains. A private equity firm is a business owned by many investors that uses sophisticated processes to invest its capital. PE companies are usually much more interested in returns on investment than most other companies. The most popular category of private equity is buy-out transactions, or venture capital. The target company is either sold to other investors, or to the PE firm itself, if it has been sold. PE firms typically have a portfolio of investments that they manage (Gemson, 2021).
Private equity firms use two distinct strategies to acquire firms. The first strategy involves the strategic partnership between the private equity firms and other private companies. This partnership enables the private equity firms to access the expertise of other companies. The second strategy is direct acquisition by a private equity firm. The main objective of the acquisition is to acquire the target firms and then make them a part of its portfolio of companies. The acquired companies usually have access to management and business skills that are useful in the companies (Gemson, 2021). Private Equity Firm Acquisition
Antoni, M., Maug, E., & Obernberger, S. (2019). Private equity and human capital risk. Journal of Financial Economics, 133(3), 634-657.
Gemson, J. (2021). Private company acquisitions in the market for corporate control: A comparison between private equity and corporate acquirers. The Quarterly Review of Economics and Finance, 81, 342-357.
Role of Private equity firm acquisition
The key purpose of private equity manufacturing or retail firms is aimed at providing the stakeholders and the other investors a huge profit. The PE firms in the retail and the manufacturing domain involve buying other companies to enhance competitive advantages, value addition, and the improvement of the overall performance. In general, the manufacturing PE firm aims to purchase the other companies that are triggered by the acquired funding in the business process. These are the most intriguing factors that need to be placed in the operation while catering to the huge need of the business to help secure the value, reputation, and other purposes. The cost-cutting or liquidation of the acquired businesses or firms is targeted to sell and make huge profits at the same time (Humphery‐Jenner et al., 2017). As the kind of collateral, PE firms in the retail and manufacturing businesses have been proposing the leveraged buyout based on its target and other approaches.
Impact of Private equity firm acquisition
PE businesses usually make purchases and other approaches in operation based on the agreed investment of the fund in the other operations and businesses, which would help the PE firms to enhance investment in the business assets, introduce and develop new products, new market expansion through spending on marketing and sales to a great extent (sTan et al., 2019). Diverse manufacturing and retail firms operate using different models that help them to measure and gauge success and other purposes. The approach of Hands off has been the most intriguing factor that needs to interfere by the PE firm while being capable of streamlining the business and the other approaches in the PE form to a large extent. This is targeted to enhance the overall investment while showing the key intervention based on the system administration of the acquisition of the PE forms. In the recent years of acquisition in the manufacturing or non-manifesting industries, the PR firms are capable of determining the acquisition of the large companies by the proposed and determined to help increase the overall sales in operation (Dimitrova, 2017). The strong management and the organizational structure in the PE firms based on the equity investment justification to a great extent. These are the most articulated and intriguing factor which plays a pivotal role in manufacturing or other business firms based on their overall need in the business operation. The equity investment justification in the operation has been the other key approaches which are triggered and streamlined based on the architectural demand in the operation.
Dimitrova, L. (2017). Perverse incentives of special purpose acquisition companies, the “poor man’s private equity funds”. Journal of Accounting and Economics, 63(1), 99-120. https://ore.exeter.ac.uk/repository/bitstream/handle/10871/25163/Manuscript_4.pdf?sequence=1
Humphery‐Jenner, M., Sautner, Z., & Suchard, J. A. (2017). Cross‐border mergers and acquisitions: The role of private equity firms. Strategic Management Journal, 38(8), 1688-1700. https://www.econstor.eu/bitstream/10419/87438/1/12-031.pdf
Tan, S., Seiger, K., Renehan, P., & Mostaghimi, A. (2019). Trends in private equity acquisition of dermatology practices in the United States. JAMA dermatology, 155(9), 1013-1021. https://jamanetwork.com/journals/jamadermatology/articlepdf/2738309/jamadermatology_tan_2019_oi_190037.pdf