You’ve probably heard the term “private equity” before. Indeed, Mack Capital is a private equity firm. What you may not know, however, is that there are nine variations of private equity strategies, each with advantages and disadvantages for investors. When looking for an investment firm, you’ll want to pick one that offers the type of private equity that best suits…
You may have heard the term “accredited investor” before. For example, you might have seen a discussion about someone investing in a company, and it comes up that they are accredited. Being an accredited investor can open up a world of opportunities that are not available to non-accredited individuals. In this post, let’s explore more about what it means to…
Taking a company public is no small endeavor. If you’ve been following the markets, you have likely heard of SPACs (Special Purpose Acquisition Companies). This new method for going public has taken the financial world by storm, and practically everyone in Silicon Valley has either raised one or wants to create one.
Historically, when companies wanted to go public, they’d typically need to do a traditional IPO. Now, companies have three options: traditional IPO, direct listing, or SPAC. Each one has its advantages and disadvantages for taking a company public. Let’s (briefly) explore what each option is, and when a company might prefer one or the other.
Traditional IPO
The traditional IPO process is the way that companies have raised capital for decades. The process is straightforward and well-known. A company or investment bank will start the process by filing an S-1. This form is necessary for every single U.S. company that wants a listing on a national exchange. The company files it typically in anticipation of or conjunction with an IPO.
A company intending to go public then partners with an investment bank to underwrite the shares and sell them to prospective investors. The investment bank essentially handpicks the price and allocation, intending to have 97% of investors interested in the IPO and a 30x over-subscribe rate.
For the most part, mom and pop investors cannot invest in these IPOs. Only the best clients can. Given these aggressive targets, IPOs often result in a large first-trading-day “pop.” A good, recent example of this was nCino, which had an IPO of $248 million and saw a rise of 150% on its first trading day
You may have heard the term “social investing” before. Broadly, this term describes investing that doesn’t just have financial returns as the end goal. These investments have social returns, as well. Investing in companies and ideas that combat climate change, promote a better future, or advance a social cause would be examples of social investing. It’s a popular way to…
The world seemingly has a substantial amount of uncertainty these days. Between COVID-19 and the upcoming election, the United States equity markets could begin to experience volatility. Wells Fargo speculated that volatility would spike after the election because the VIX 3-month option is very high. Therefore, many people are expecting volatility to go up in the November-December timeframe. As any…
Private equity contributes significant value to the broader economic market. Without VC funding (a form of private equity), for example, startups wouldn’t raise money. You wouldn’t have Facebook or Twitter without that infusion of private equity capital. Indeed, the amount of money in private equity is substantial. Why, though, do investors brother with private equity? After all, according to historical…
Mack Capital is a private equity company. You may have heard the term “private equity” before, considering that private equity firms have a record $1.5 trillion in cash, and there are at least that many trillions invested with these types of firms. While past performance is by no means a guarantee of future returns, private equity companies have historically done…
