Private Equity - Realza Capital, Free Essay on Investment

Realza Capital is a good opportunity. First, this business is stationed in Spain where GDP has been high compared to other countries in Europe. Spain's GDP has an annual growth rate of 3.5% while Europe's GDP growth rate is 2%. This shows that investing in Spain is a good opportunity. The other reason why Realza Capital is a good opportunity is that it is listed under small-medium enterprises (SMEs). SMEs have been found to be flourishing in Spain. This is because fast-moving companies in the country are family owned and medium-sized companies.

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Realza Capital is a company that has the opportunity of growing in future because of its size and development stage. Realza Capital is at the development stage, meaning it is the best for buying and build. There is a huge challenge because the business lacks sophisticated finances an administration, but these are issues that can be countered once an investor has funded the business. Therefore, this is a business that any investor should be pleased although one of their investors had called off the deal.

Pros and cons of offers received

The first offer received was from a major European private equity group. The main advantage of activating this offer is that this will provide Realza Capital with an international platform. This is because the business will be linked to a European business that has ties to other countries such as Britain. The other advantage of this offer is that the issue of finance sophistication will be solved since this company is financially stable. The main disadvantage of this offer is that the GDP growth rate of Europe is lower than that of Spain. This issue might limit the growth of Realza Capital.

The second offer received was from a high worth individual in Spain who wanted Realza Capital to be his asset manager. The main advantage of this offer is that the business will be located and controlled in Spain, so Europe's GDP will not affect the growth rate of the company. The other advantage is that this individual is high worth. This shows that he can help finance the business to the target of the partners. The main disadvantage of taking this offer is that the administration of the business will not be improved. This is because there will be no input from a major corporation.

The final offer presented to Realza Capital was from a major European private equity who wanted Realza Capital to join as co-heads and become the Spanish branch. The main advantage of this offer is that both administration and finances will be improved. However, there will be the effect of European GDP because although the business will be in Spain finances will be centralized at the Head Office which will not be in Spain. The disadvantage of this offer is that the strategies of the founders may be compromised because with this offer strategies will be formulated such that they can satisfy all branches of the company. Therefore, the vision of the founders may be terminated by this offer.

Grupo Santos is a company that is a business that is concentrated on increasing its personnel and constructing a budget. It is also aspiring to provide a new product. These are strategies for a business that wants to improve its size and revenue. However, this can make a company increase its debts because these projects will require financing. Its main value driver is size. Logic Control is a company that has been able to reduce its debt size since its entry. This is because the company concentrated on ensuring there is low expenditure in the company, and customers were retained to ensure steady revenue. Its value driver is customer satisfaction and ensuring it is the top firm in the industry.

Zavala and Gonzalez are people who have experience in equity because they all worked for private equity businesses. They came up with a strategy of getting small customers who had been let go by their company. Zavala and Gonzalez believed that they needed these customers for their start-up. They personally approached customers to lure them to their company. This shows that the business will have enough customers for the start hence improving its value.

There are certain aspects that small companies should hold to even in case of acquisitions. The first term that would be negotiated is finances. It has to be discussed how the business will be financed, and where these finances will be managed. This is because finances can either be managed by the main company or the small business. It also has to be clear the period it will take for these finances to be available. The other term that should be negotiated is the percentage that will be owned by the partners, and the one that will be owned by the financier. This is important to ensure that division of profits is accurate. Realza Capital should hold firm to be the highest shareholder of the business, and the manager of the finances. This is important to ensure that strategies that were formulated by the founders are not interfered with. Zavala and Gonzalez also need to be the highest shareholders of the company. This is important to ensure that in case the acquisition is dissolved in future they do not lose ownership of the company.