There is a lot of speculation and uncertainty regarding the impact of Mitt Romney versus Barack Obama in the impending 2012 presidential campaign. While the political and socioeconomic policies will be impacted, I’d like to take this opportunity to focus on the ramifications for useful capital growth strategies.
There has always been confusion regarding tiered structures of private equity such as the pros/cons and benefits of venture capital versus growth capital versus mezzanine and other.
Growth companies create jobs and tax revenues. And without a doubt, private equity’s growth capital has provided crucial liquidity to facilitate growth and generational transfer of small and mid-sized business. Here are a few growth capital facts:
- More than half of private business revenues is sponsored by private equity.
- Private equity backed companies outperform the rest of the market in terms of both sales and job growth. Did you know that from 1995- 2009, private capital backed companies grew jobs by 82% while all other companies grew by 12%? Companies supported by private equity growth capital investments demonstrate sustained growth over time, especially in companies with employment size 10 to 499.
A more robust economy requires a healthy capital sector that is actively investing in middle market companies as well as small business in growth industries such as information services, health care, SaaS software, and technology.
As the business landscape has changed, resource constraints such as higher operating costs today versus last decade, makes the availability of useful capital critical to growth. Beyond incenting growth companies to create jobs the deployment of growth capital is key to economic growth.
And regardless of party affiliation, strong effective leadership is needed at the company operating level to succeed and attract useful capital for growth.
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