Goldman Sachs
An important rule to follow when considering investing in private equity is to review the success of equity investment firms like Goldman Sachs Capital Partners. Private equity is an investment tool that carries high risk and benefits individuals with the financial ability to be involved with a long term endeavor with positive yields on the horizon.
As part of a well diversified portfolio, private equity has proven quite fruitful for investors over the past decade with several firms experiencing exponential growth in asset management. But, prior to rushing to get involved, it is important to know more about Goldman Sachs Capital Partners and private equity.
What is Goldman Sachs Capital Partners?
As a division of the financial institution Goldman Sachs, Capital Partners focuses primarily on leveraged buyouts and growth capital investments on a global scale. The firm is headquartered in the heart of the financial center of New York City.
Since this division began operating, their financial records show over $40 billion dollars in raised funding with half invested and spread across several different funds.
Although slow to commit at first, Goldman Sachs became a prominent player in private equity investments through the 90’s and has built a powerhouse over the past decade.
Understanding Private Equity
The term Private Equity is used to describe securities that are only offered to investment institutions and not to the general public vis-à-vis an exchange like a stock market.
Professionals in finance commonly use the terms leveraged buyout, growth capital, and distressed securities when discussing or reporting on this area of investment.
In this opportunity, financial institutions raise investment capital from interested parties and use the funds to acquire, control, or otherwise manipulate the progress of the company.
It is important to note that while private equity investments are high risk, the value of investing with Goldman Sachs Capital Partners is their principle of only seeking opportunity with well-established companies with valuable hard assets and a proven record of cash flows.
Leveraged Buyout Explained
When an investment firm recognizes an opportunity for a private equity acquisition, there are several ways in which they can work out the deal that is advantages for the individual investor and the company at hand.
An across the board buyout would mean that Goldman Sachs takes full control of operations and assets of a company.
A leveraged buyout however provides GS simply with controlling interest. With controlling interest, they are able to restructure the corporate operations of the company and assist the company in reaching revenue targets.
Altogether a separate strategy, Growth Capital is used as a sort of bailout for companies struggling to raise the capital necessary to invest in new products or new markets. In most cases, Goldman Sachs Capital Partners do not take majority control of a company, but rather influences decisions and provide significant incentives for the company’s turnaround.
Notable Leveraged Buyouts
Just in the past ten years, Goldman Sachs Capital Partners have acquired controlling interest in a number of recognizable brands.
Burger King 2002: When Burger King failed to reach certain financial performance targets, Goldman Sachs restructured the company and renewed prospects for profitability.
Alltell Wireless 2007: Alltel was struggling in the red when GS Capital Partners leveraged a buyout. They sold Alltel to Verizon for a considerable gain.
SunGard 2002: As perhaps one of the largest leveraged buyout acquisitions in history, private equity investors with Goldman Sachs have taken advantage of a reinvigorated dot.com market.
TXU 2007: In one of its most admired leveraged buyouts amongst finance professionals, Goldman Sachs Capital Partners acquired this regulated and energy producing utility.
