Private Investing is investing in privately held companies, similar to investing in companies that offer securities as a listing on one of the publicly traded indexes (NYSE, NASDAQ, TSE, etc.). While there are fundamental differences between investing in publically traded and privately held companies, both can be contributing and complementary components of an over-all investment strategy {see post on Equifaira blog, “Public and Private Investing – What should you know”}.
With any investment strategy, it is important to first identify investment goals in order to determine the best strategy to meet your objectives. A professional financial and investment advisor with a proven track record of success can be most useful here. Having determined personal goals for investing, consider whether private investing makes sense as a part of a diversified portfolio.
Many companies offer investors equity in their company as a means to raise capital. Whether a company chooses to do so as a part of a public offering, or to remain a privately-owned venture is a strategic decision with pros and cons on both sides.
The decision to “go public” or to remain private can be made at any point in the life-span of a company. There are many examples of start-up and early-stage ventures entering onto a publically traded stock market, while many long-established and highly successful and iconic companies have remained private.
As an investment, whether early-stage or well-established, and whether publically-traded or private, each scenario represents different characteristics, with each having the potential to contribute to an over-all investment strategy. At Equifaira Advisors, we carefully select privately held, Founder-led companies {see post on Equifaira blog, “Why Does Equifaira Select Founder Led Companies?”} who have a goal to create a liquidity event.
A liquidity event converts the ownership equity held by a company’s Founders and Investors into cash. Common liquidity events include: an initial public offering (I.P.O.) or; a sale, acquisition or merger of the business {see post on Equifaira blog, “What is a Liquidity Event?”}. The mission for Equifaira is to work with these Founders and their teams to help them achieve their vision.
All companies, no matter how well-established or whether publically or privately held, have inherent risk to them. There can be unique risk associated with earlier-stage companies who have not yet established a long-standing record of business operations. This can be true whether the company has chosen to go public, or remain privately held.
However, carefully selected privately held companies may represent a high-yield opportunity within an over-all investment strategy.
Private companies, focused on immediately addressable, billion-dollar market opportunities, have the potential for investors to share in the value that can be created in a well-planned liquidity event. While well-managed companies can continue to generate value for their investors throughout their existence, it is often the initial liquidity event that holds the potential for exceptional results.
