Sponsored Content: Does your middle market company need financing assistance?
Middle market companies, as the name suggests, fall between smaller and larger companies in terms of size and revenue. As the number of middle market companies continues to grow, so does the number of investors targeting the middle market. Middle market companies are often in the expansion phase of their business cycle and may be struggling with raising capital or otherwise obtaining financing.
The middle market offers a greater number of companies to invest in, more opportunities to implement operational change and lower valuations and barriers to entry. These favorable attributes have made middle market companies among the most sought-after investment opportunities.
There are two categories of financing for middle market companies to consider: debt financing and equity financing. With debt financing, the company is borrowing money from a lender. Debt financing is attractive because it does not require any additional shares to be issued, preserving current stockholders’ percentage of ownership. Equity financing, by contrast, raises capital through the issuance of additional shares in the company.
Middle market companies looking to raise capital may also be deciding between venture capital and private equity. Private equity firms tend to buy established, mature companies that may be declining in profits. Private equity firms usually buy 100% ownership of these companies, thereby totally controlling the firm so as to streamline its operations and increase its revenues.
Venture capital, on the other hand, provides startup capital for emerging companies characterized by high growth potential and high risk. Venture capital firms typically prefer to diversify their risk by investing in multiple companies. In contrast, private equity investors tend to invest in more stable and established firms with lower risk levels.
Regardless of the financing needs of your company, it is imperative that you work with an engaged legal team that is familiar with your industry, your business objectives and the particular market issues you face. The legal team you select serves as not only your advisor, but also your ambassador through what can be an otherwise complicated process. Contact Taft’s Private Equity or Venture Capital attorneys for more information.