Critical analysis of private equity investments in SME

Seminar paper from the year 2019 in the subject Business economics - Investment and Finance, grade: 2,0, University of applied sciences, Düsseldorf, course: International Investment & Controlling, language: English, abstract: Is it worth the time and work involved in taking various risks and sometimes the path into the unknown? This question arises in the context with private equity financing. However, this is also a question which arises in companies when it comes to identifying a source of finance. No matter for what reason the company needs a financial injection, either for internal development, new production machinery or for a breakthrough into new markets.

In order to find out more about private equity, the assignments objective for the module ¿International Investment & Controlling¿ addresses the topic:

¿Critical analysis of private equity investments in SME¿

For this purpose, this assignment will start with a short introduction on the relevance of the topic, followed by the fundamentals and theoretical basis of private equity as well as about SME¿s. Furthermore, the actual problematic situation which belongs to private equity investments is presented. After these introducing topics the paper switches to its main part, the critical analysis about

- Investment done by GP / LP and a return increase;

- Leveraged buyouts;

- Risks characteristics;

- Rules, regulations & contractual infrastructure.

Finally, a conclusion as well as a critical outlook are provided. This conclusion contains that both, investors and companies, want to have a clearer view about risks and contractual requirements and restrictions.