Private equity investors are entities or individuals with a certain amount of resources left to companies. These private investors simply hand over the money and receive it in exchange with interest. That is, they do not get involved in the company or its decisions. Also in exchange for having majority or minority participation in the company.
What is a private equity investor?
A private investor is one who invests money in a private company. The money is invested to get interest, in order to maximize the value of such investment.
Private capital is developed by specialized entities. These private investors give companies money for a while. Normally 10 years or less.
A private investor generally lends the money and that’s it, he doesn’t get involved. However, it is sometimes agreed that the investor is part of the company more than 50%. If so, they do participate in decisions that ultimately benefit both parties.
Private capital is that money provided by expert investors, in companies that have good growth potential. The great objective is that companies acquire more value than they already have.
Relationship of investors with companies
Private investors not only provide money to companies, but they have some factors that they should consider to do so. The most important of all is that the company is not in its initial stage.
When a company starts, the risks are very high and for this you can count on another type of investment, but when the company is in an advanced stage, it is where private capital can help.
Money from private investors in Andorra
Private investors manage the money of other entities and for that reason they are careful when making an investment. That is why companies that are in the beginning cannot help them. Private capital cannot take the risk of taking the first steps.
A private investor needs more developed companies that demonstrate high potential. That is to say, that they are successful companies or that they demonstrate that they can be. This helps to take less risks when deciding to invest in them or not.
Being managers of others’ money, they should not only choose their investments well. They must also be accountable at the legal level, according to their decisions.
Therefore, once the company grows and matures, private investors take action. The idea is that the private investor be part of the company as a shareholder. Then, the main objective is to take the company to the stock market in the future.
In the Principality of Andorra this type of investment is very common, due to the advantages it offers for investors. In addition, it is a place with a prosperous and stable economy. It is ideal for investors who want to invest and their taxes are very low.
Advantages and disadvantages of being a private investor
Being a private investor has both advantages and disadvantages. But there are more of its multiple benefits.
Advantage:
- It helps other companies in their growth and considerably improves their turnover.
- They receive a good rate in exchange for the investment made. You can also be part of the company as a shareholder.
- They help make the company much more profitable.
- Economic resources are usually quick to obtain.
- They allow the company to acquire more value and allow it to have more opportunities.
Disadvantages:
- Investing always carries risks.
- They don’t get very involved with the company in terms of decision making.
Private equity investors or Angel Investors?
Many people confuse Angel Investors with private investors, but they are different. A big difference is the rate of return that a private investor could ask for. It is usually a bit high to be able to compensate for the risk it assumes when investing in a company.
On the other hand, Angel Investors use their own money in the investments they make. On the other hand, private investors do not.
Another big difference is that private investors invest in developed companies. Instead, the Angel Investorsapoya to companies from its first steps.
In the same way, the Angel Investors gets involved and helps companies from the first moment and in everything they need. Private capital is a bit more distant.
