Discussion with two respones

Student must read the week’s chapter and article and explain the impact of private equity firm acquisition of manufacturing and retail firms.

 Discussion 1

A private equity firm refers to investment management companies that offer financial support to firms and devises investment strategies such as leveraged buyout and growth capital for firms. Private equity firms’ acquisition of manufacturing and retail has huge impacts, such as the realization of higher returns by the firms. Once the private equity firms come into play in these firms, it helps through the provision of technical expertise, which makes production more effective hence commanding large marketing share (Fontenay, 2013). The private equity firms, more importantly, provide the funding to these firms, which help in the execution of operations and productions. The private equity firms source the funding into the business, and it helps to sort of financial challenges which the firms help while producing or reselling the goods, which makes their operations effective hence, more profits are realized due to huge sales.
Private equity firms also offer active involvement in the management aspects of the firms, which in turn makes it possible for firms to operate under efficiency. This makes the firms gain a competitive edge in the market; hence, they are in a position to increase their capacities and become more productive since they get the necessary support from the private equity firms.
Private equity firms’ acquisition of manufacturing and retail firms is associated with some negative impacts such as firms losing their management control since the firms take every aspect of management of the operations in a bid to increase the profitability of the firms through the implementation of the investment strategies (Fujiwara, 2013). The private equity firms are also only concerned with the financial profits, which differ from the firm’s objectives, which include maintaining a good relationship with employees and other stakeholders. 
References
Fontenay, E. (2013). Private Equity Firms as Gatekeepers. SSRN Electronic Journal. doi: 10.2139/ssrn.2245156
Fujiwara, H. (2013). What Shapes Venture Capital Firms’ Expansion across the Globe?Country-Specific Factors and Firm-Specific Factors. The Journal of Private Equity, 131115064040007. doi: 10.3905/jpe.2013.2013.1.031

Discussion 2

 
Private equity is a source of investment capital. Individuals with a large amount of money can decide to buy shares from private companies or resume management of public companies to make them private. They act as a source of funding for firms that require a massive amount of money for the operation. Private equity firms have positive and negative impacts and are as follows.
Private equity firm ensures the overflow of capital in the company. They ensure the smooth running of the organization by providing enough money for all the operations. These private equity firm always channels billions of dollars to an organization that has financial constraints or rather new companies with a potential of expanding. Active involvement of the private equity firm is another advantage. Since they channel in a lot of funding, they also take an active role in the daily running of the business, thus promoting diversity in management. High returns are also another positive impact with a combination of top funding and incentives and proper management the returns are always high for such firms.(Sinnenberg 2005).
 Dilution or loss of ownership stake is one negative impact of private equity firm. With the much funding that is involved, the company is at risk of losing its ownership stake to a private equity firm. It can happen when the company cannot buy back the sold shares. Loss of management control is another negative impact. (Ball 2006). Through the active involvement of and buying of a lot of shares by private equity firms, an organization can lose its management control of the firm to the private equity firms.
In cessation, private equity firms act as an external source of investment capital. They also help the company in managerial work due to their active involvement in the business after funding. They provide incentives and other needs of a company. However, the use of private equity firms can also be regrettable since one may experience loss all the shares and even the right to management of the firm. Private equity firm is advantageous and too disadvantageous.
                                                References
Davis, S. J., Haltiwanger, J. C., Jarmin, R. S., Lerner, J., & Miranda, J. (2011). Private equity and employment (No. w17399). National Bureau of Economic Research.https://www.nber.org/papers/w17399
Sonnenberg, J. (2005). The pros and cons of going private: going private is not a panacea for an ailing public company.  But there is no question that the downsides of being open, especially for a small company, maybe more significant than ever. Financial Executive, 21(1), 24-28.https://go.galegroup.com/ps/i.do?