Raising capital / private equity financing
Raising capital in the form of equity from individuals or from private equity firms is a strategic financing option for businesses seeking growth, expansion, or restructuring opportunities. This injection of capital provides the necessary resources to scale operations, develop new products, or enter new markets. In return, investors gain equity stakes, dividends, or other financial incentives, aligning their interests with the success of the venture.
Equity can be raised from the founders or shareholders themselves in an initial capital contribution. This is most common for a small company that is looking to bootstrap a business without capital from third parties.
Private equity firms often invest in privately held companies by purchasing ownership stakes in exchange for capital infusion. Private equity firms provide not only capital but also strategic guidance and operational expertise to enhance the value of their investments.
Private placements involve offering shares or ownership interests in the company to a select group of accredited investors. These offerings are typically exempt from public registration requirements and can be an efficient way to raise capital from private investors. Private placements can be used to finance acquisitions or provide capital for expansion.
Mezzanine financing represents a hybrid form of debt and equity financing. It involves raising funds through subordinated debt or preferred equity that sits between senior debt and common equity in the capital structure. Mezzanine financing is often used to bridge the gap between the amount of debt a business can secure and the total capital needed for an acquisition or expansion.
In private equity financing, lawyers play a critical role in facilitating the legal aspects of investment transactions between individuals, shareholders, private equity firms and the companies seeking funding. Contact one of our business lawyers to discuss how we can assist.
