• Where to find small-scale private equity opportunities

    by  • April 8, 2013 • Investing • 0 Comments

    Local private-equity investment opportunities are a great way for personal investors to build up the integrity of their personal portfolios, so long as they are able to get it checked over by their financial adviser before putting forward any funds. Between the capacity for a private placement to pay out a strong yield, maintain a tangible investment basis through assets, and be held accountable by the investor themselves, it allows for the establishment of a higher-reward investment, without taking on as much risk as would be required for an equivalent position in the open equity markets.

    That being said, these opportunities can be sometimes hard to find, because of the way in which most private-equity firms are not really allowed to advertise their presence beyond specific mediums. As such, investors need to be aware of where it is that they can find legitimate opportunities for small-scale local private equity opportunities.

    top-secretThe first thing to remember about private equity deals is that they are not always available to personal investors. High-level transactions usually require that a person hold ‘accredited investor’ status, meaning that they earn a particularly high income ($250k/year), or have a particularly high net worth ($ 2million in assets). In order for a company to be able to move beyond the stage at which it is required to have only accredited investors involved, it needs to establish itself for a number of years as being self sufficient, must be audited by a third party, and must offer securities under specific guidelines that depend on jurisdiction.

    While some companies do not require enough funding to motivate them to pursue this kind of status (such as a technology company, which will usually only need a moderate cash injection at start-up to finance its product), it also makes it easier for personal investors to evaluate available opportunities because of the way in which they are streamlined through so many financial professionals. From there, as these professionals review the company, they also tend to take note of particularly appealing opportunities and bring them to the attention of financial analysts and advisers that can bring the offering forward to clients.

    The idea here is that investment professions tend to discuss various opportunities among themselves, and take pride in being able to find private placements that can help a colleague’s client earn a return within their portfolio’s risk profile. As such, the first place for a personal investor to look for private placements is through their financial adviser, because it allows the adviser to begin inquiring into their professional networks to see if there is anything good available.

    Aside from networking through an adviser, a personal investor can track down private equity investment opportunities through trade-show events (often called ‘road shows’). These events are designed specifically to bring investors and managers within a single industry together, so that they can review the private investment opportunities available that aren’t normally seen by the public. For example, investors wanting to buy into a small oil drilling project could go to an oil and gas road-show to meet with the management or investor relations teams of various small drilling companies that are operating in the region in question.

    These road shows are a great starting place, because it allows investors to not only build up an understanding of the various opportunities available, but to also meet personally with the management teams behind their investments, and take a minute to assess their competence on a personal basis. Industries that are particularly conducive to road shows are resource development, real estate, infrastructure construction, and any other kind of company that works on individually large, capital-intensive projects once at a time.

    About

    Raymond is a retired banker from Michigan where he lives with his wife.

    Leave a Reply

    Your email address will not be published. Required fields are marked *