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Private Equity Firm

Student Name

Course Name

January 9, 2021
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Private Equity Firm

A private equity firm can be described as a company that has specialized in financing and

financing industries and buys businesses that are not traded publicly on the market. These

organizations fund businesses that are not traded publicly, award them financial credits for their

activities, and support failing companies. They run and return to their operational stability—the

acquisition by these companies of production or retail business impacts the newly acquired

company. The impact of acquiring a manufacturing company can vary from the impact of

acquiring a retail business. This is because a production company works wholesale with

distributors, while a distribution company works with the actual customer on the

market[CITATION Aki17 \p 574-581 \l 1033 ].

If a private equity company acquires a manufacturing company, these businesses will run

and have manufacturing companies at a higher return level because of their capital resources.

Their stable capital base allows private equity firms to invest in raw material procurement,

thereby improving manufacturing production. When a private equity corporation has purchased a

manufacturing business, privately-owned companies are responsible for ensuring that the

producing company takes the best advantage of the market place and therefore uses their

financial strength to market such a manufacturing entity, thus making consumers aware of a

production entity's presence on the market [CITATION Gat14 \p 1-10 \l 1033 ].

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In general, changes in the investment in a company's capital are intended to directly or

indirectly improve its production and sales. Consequently, increased capital spending for

businesses purchased by private equity companies can be related to rises in their revenue over

recent years. The data disclose the connection: the large businesses purchased by major private

equity firms in the years following their acquisitions increased their revenues by almost 60

percent more than the average for both US manufacturers and non-manufacturers.

Also, the rise of private equity-backed firms' revenue per employee was twice as high as

in all the companies, a sharp measure of competitiveness and performance. Data on sales-per-

employee rises that provide an overall measure of productivity and efficiency also shows that

businesses have achieved success by major private equity firms during this time. New jobs were

generated by large companies purchased by large private equity companies, five to seven times

the average of all manufacturing and non-manufactory companies[CITATION son09 \p 1-10 \l

1033 ].
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References

Akin, I. (2017). Private equity and impacts on recent financial crisis. International Journal of

Social Humanities Sciences Research, 4(11), 574-581. Retrieved from

https://www.researchgate.net/publication/320522612_PRIVATE_EQUITY_AND_IMPA

CTS_ON_RECENT_FINANCIAL_CRISIS

Gatauwa, J. M., & Mwithiga, A. S. (2014). Private equity and economic growth: a critical review

of the literature. European Journal of Business and Innovation Research, 2(3), 1-10.

Retrieved from

https://www.researchgate.net/publication/327014272_PRIVATE_EQUITY_AND_ECO

NOMIC_GROWTH_A_CRITICAL_REVIEW_OF_THE_LITERATURE

sonecon. (2009). The Impact of Private Equity Acquisitions and Operations. Retrieved from

sonecon:

https://www.sonecon.com/docs/studies/Private_Equity_Capital_Spending_Sales_Jobs-

January2009.pdf