Financial sponsor

Financial sponsor

A financial sponsor is a term commonly used to refer to private equity investment firms, particularly those private equity firms that engage in leveraged buyout or LBO transactions. [ [http://www.abanet.org/buslaw/blt/2008-01-02/blomberg.shtml Private Equity Transactions: Understanding Some Fundamental Principles] (American Bar Association)]

In addition to bringing capital to an investment, financial sponsors are expected to bring a combination of capital markets expertise, various important contacts, strategies for operational improvement and experience owning leveraged companies. [ [http://www.allbusiness.com/company-activities-management/company-structures/8912293-1.html Private Equity as a Strategic Financing Tool for M&A] (Orange County Business Journal)] As the owners of the company, financial sponsors rarely manage a company directly and are most active in issues relating to the company's capital structure and balance sheet as well as strategic initiatives including mergers and acquisitions, joint ventures and management restructurings. The company's CEO and other senior management maintain responsibility for day-to-day operational issues.

Financial Sponsors and Other Investors

Various investor classes look to the financial sponsor to generate value in a company as much as the management or operations of the company. In particular, debt providers are willing to extend credit in the form of bank loans, high-yield debt and mezzanine capital based in part on the reputation of and relationship with the financial sponsor. [ [http://www.gettingthedealthrough.com/narrative_chapter.php?id=43&sector_id=7 Global Overview: Year of the buyout] (Getting the Deal Through, 2007)]

Additionally, many companies owned by financial sponsors will raise equity in the public markets through an initial public offering or (IPO) as a means of exiting an investment. Public investors will seek to align their own interests as much as possible with those of the financial sponsor by limiting the financial sponsor's ability to sell shares and managing the use of proceeds from the offering. Various studies have been conducted to evaluate the impact of financial sponsor ownership on the performance of IPOs. [ [http://www.efinancialnews.com/privateequity/peoplemoves/content/2450554955 Financial sponsors profit from flotations in US] (DowJones Financial News, 2007)]

ee also

*Private equity
*Private equity firm
*Private equity fund
*List of private equity firms
*Leveraged buyout
*Management buyout

References



Wikimedia Foundation. 2010.

Игры ⚽ Поможем сделать НИР

Look at other dictionaries:

  • Financial Sponsor — Private Equity (deutsch Außerbörsliches Beteiligungskapital) ist eine Form des Beteiligungskapitals, bei der die vom Kapitalgeber eingegangene Beteiligung nicht an geregelten Märkten (Börsen) handelbar ist. Die Kapitalgeber können private oder… …   Deutsch Wikipedia

  • Financial modeling — is the task of building an abstract representation (a model) of a financial decision making situation.[1] This is a mathematical model designed to represent (a simplified version of) the performance of a financial asset or a portfolio, of a… …   Wikipedia

  • Financial endowment — A financial endowment is a transfer of money or property donated to an institution. The total value of an institution s investments is often referred to as the institution s endowment and is typically organized as a public charity, private… …   Wikipedia

  • sponsor — spon·sor n 1: a legislator who introduces and supports a legislative proposal (as a bill or amendment) 2: a person who assumes responsibility for some other person (as an immigrant) or thing 3 a: one that securitizes assets b: one that promotes,… …   Law dictionary

  • sponsor — n Sponsor, patron, surety, guarantor, backer, angel are comparable when they denote a person who in a greater or less degree accepts responsibility for another person or for a particular venture or undertaking. Sponsor usually implies public… …   New Dictionary of Synonyms

  • sponsor — [spän′sər] n. [L, surety < spondere, to promise solemnly < IE base * spend , to bring a libation, vow > Gr spendein, to promise, spondē, libation] 1. a person or agency that undertakes certain responsibilities in connection with some… …   English World dictionary

  • Sponsor — Spon sor ( s[ e]r), n. [L., from spondere, sponsum, to engage one s self. See {Spouse}.] 1. One who binds himself to answer for another, and is responsible for his default; a surety. [1913 Webster] 2. One who at the baptism of an infant professes …   The Collaborative International Dictionary of English

  • sponsor — An underwriting investment company that offers shares in its mutual funds, or an influential institution that highly values a particular security and thus creates additional demand for the security. In the context of project financing, a… …   Financial and business terms

  • sponsor — I UK [ˈspɒnsə(r)] / US [ˈspɑnsər] verb [transitive] Word forms sponsor : present tense I/you/we/they sponsor he/she/it sponsors present participle sponsoring past tense sponsored past participle sponsored ** 1) to pay for or give money to an… …   English dictionary

  • sponsor — spon|sor1 [ spansər ] verb transitive ** 1. ) to pay for or give money to an event, a television or radio program, a WEB SITE, etc.: Nissan sponsors the championships as part of its community relations work. a ) to agree to give money to someone… …   Usage of the words and phrases in modern English

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”