Equity Loan

Equity loan

Is typically an "investment" in a company that is secured by a certain amount of that company’s shares and structured, in part or whole, as a loan. Investment banks will provide funds secured by the "equity" or ownership shares of your company.

Companies that receive funding are those in large rapidly growing markets, or in niche markets which are not targeted by major players.

Investment Stage

Early and later stage companies with a founder and partial management team with revenue or profits and the need for expansion capital.

Size of the Investment

Typically $1-2 million initially with up to $5-10 million over the life of the investment.

Duration

Investments typically are for 3-5 years, but sometimes may last longer.

Management Buy Out

Management buy out: Existing company managers acquire a large part of ownership.

Management buy out solutions involve working to structure the buyout of the corporation, subsidiary, division, or product line from start to finish. During this process if a company is already public than it would become a private company once the management took over ownership. Most of the time though during this phase a company is privately held.

The concerns that go along with a management buy out is that the management will possess more knowledge than the previous owners due to their current positions. Another negative of a pending management buy out is the downward spiral of the company stock prices. Once current investors get word of this they will start selling their shares.

Many people are against a management buy out because they think it could be considered insider training because of the knowledge of the management of the business situation.

Management will choose to pursue a management buy out since they want to save their current jobs. They can tell that the company may be going under, so they want to work hard to resurrect the company and make some big changes. Also the management may have received word that an outside management team is coming in to take over their posts. It is enough to bring them to take action.

Even if all of the managers pooled all of their money together, it typically would not be enough capital to really save the business. So it is good to pursue some debt financing options found in our free business capital search engine.

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