Alternative Investments: We Focus on Growth Equity

Private Equity (PE) exposure plays a crucial role in a diversified portfolio, offering numerous benefits to investors and companies alike. Besides offering increased diversification, PE also provides the opportunity to invest in private companies at valuations lower than those of similar publicly traded companies.

Understanding the various types of private equity investments and the mechanisms through which value is generated can help investors make well-informed decisions about their investment strategies.

The Four Types of Private Equity

Private equity investing can be divided into four main categories: venture capital, growth capital, leveraged buyouts (LBOs), and distressed investments. Each type has its characteristics and target companies, but all aim to create value for investors.

1. Venture Capital (VC)

VC focuses on early-stage companies with high growth potential. These are typically startups and small businesses with innovative ideas or technologies but lack the necessary funds to bring their products or services to market. VC provides these companies with financial support in exchange for an equity stake in the firm. They also often provide strategic guidance and mentorship to help the companies grow and succeed.

2. Leveraged Buyouts (LBOs)

Investors acquire a controlling stake in a company using a combination of equity and debt. The goal is to improve the company's financial performance and sell it for a higher price. Private equity firms often use their industry expertise and operational skills to restructure the company, cut costs, and improve efficiency. Once the company's value has increased, it can be sold for a profit or taken public through an initial public offering (IPO).

3. Distressed Investments

Investing in financially troubled companies or going through bankruptcy. These investments carry a higher risk but also have the potential for higher returns. Private equity firms use their financial expertise and negotiation skills to restructure these companies, turn them around, and sell them for a profit.

4. Growth Capital

Investments made in established companies with a proven track record of success but require additional for restructuring purposes or expansion. These companies may seek to enter new markets, acquire other businesses, or invest in research and operational development.

At Carmel, we focus on private equity opportunities where we can provide either growth or transition capital. Growth investments offer capital to companies lacking internal cash flow to execute their growth plan. In contrast, transition capital is provided when an existing owner aims to sell all or a portion of their ownership interest.

Even though Carmel takes an opportunistic approach and avoids being boxed into a particular strategy, we specialize in growth equity buy-outs and focus on investing in well-established companies to help them achieve their growth and expansion objectives.

We welcome you to explore our website's Direct Investing page for some of our current Private Equity holdings. For personalized advisory or further discussions, please contact us at info@carmelcap.com, call 858-457-7544, or visit our Contact page. 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investment advisory services are offered through Carmel Capital Partners, an SEC Registered Investment Advisor.