A Lucrative Exit by PE Funds: Recap Strategy in Turkey
Private equity becomes more popular in Turkey since majority of companies intend to utilize private equity funds. In regard to this, private equity investors are individuals or companies which provide private equity funds to distinctive ventures. Private equity firms which enable private equity funds to have different ventures because they predominantly receive on their investment through one of three ways which are an initial public offering (IPO), a sale or merger of the company they control and also a recapitalization.
Private equity makes room for business partners which impact to expanse in the structure of the business as it provides industry, operational and organizational and marketable expertise that raises the value of business. Through partnering with a private equity firm, recapitalization contributes to business owner so as to vary some personal risk during the remaining with the company over a longer time. Recapitalization for private equity has an advantage in terms of company’s debt and there are guarantees for company owners in order to reduce the level of risk. Since private equity group control the company’s ups and downs because private equity has responsibility for the existing owner through management strategy.
The aim of Private Equity Firm is that tries to enhance the value of business and assist to grow the earning of the business via rise sales and reduction costs through acquisitions. In addition to this, private equity firm can benefit from the operating cash flow of the business pay down the debt. Private equity enables the owner firm to get substantial cash out of the business so as to reinforce the financial structure for business. In regard to this, private equity mediates both the company owners and business partners to try to balance each other so as to achieve growth in the markets. When the company owners become to gain success in the development of markets, private equity firms prefer to exist strategy because the company owners of business expanse their size in terms of sector and budget so they sustain their own strategy among in the course of markets. The main approach for private equity firm is that they buy companies which own them for generally between four and six years and also sell them. It is vital that private equity prefer to buy business through a Leveraged Buyout which is related to use debt fund a portion of the purchase price. Providing that this system works, this circumstance will have an important greater value for the business according to private equity sells and they purchased it. In respect to this, there is correlation and each of them affects each other.
The instrument of recapitalization provides an opportunity for the business owners because private equity firms purvey to cash out of their businesses during staying encompassed the management and decision making. Under these circumstances, the business owners can procure with growth and liquidity options. Therefore, the business owners cannot face with huge debt crisis and liquidity problem. In the process of a recapitalization, while a shareholder’s desire to liquidate their own investment, an equity recapitalization would become very important option because there is steady approach in order to modify the company’s structure through their plans and private equity enables shareholders to reach partial liquidity in the business. As a result of this, the financial tool of recapitalization helps to regulate financial resources and makes a major contribution for its future growth. Hence, this circumstance forms a basis for sound investment in terms of level of risks.