Working capital, also referred to as net working capital, is the measure of a company's liquidity, operational efficiency, and short-term financial status. It is the difference between a business’s current assets, its inventory of materials and goods, and its existing liabilities. Net operating working capital is the difference between current assets and non-interest-bearing current liabilities. Typically, they are both calculated similarly, by deducting current liabilities from the current assets. So, essentially, if a business’s current assets total $500,000 and its current liabilities are $100,000, then its working capital is $400,000. But there are a few variations on the calculation formula based on what a financial analyst wants to include or exclude:READ MORE >>
How Private Equity Works
Private equity firms raise financing from institutions and individuals and then invest those funds into the buying and selling of businesses. Once a pre-specified amount is raised, the fund closes to new investors and is liquidated. All of the fund’s businesses are sold within a set timeframe that is typically less than ten years. The more successfully a PE firm’s funds perform, the better its ability to raise money in the future.
PE firms do accept some limitations on their use of investments under fund management contracts, such as the size of any single business investment. Once the money has been committed, investors have nearly zero control over its management, unlike a public company’s board of directors.
The leaders of the companies within a private equity portfolio are not members of the PE firm’s management. Private equity firms control its portfolio companies through representation on the boards of those companies. It is common for a PE firm to ask the CEO and other business leaders in their portfolios to invest personally. This offers a way to ensure their level of commitment and motivation. In return, the operating managers can get significant rewards that are linked to profits when the company is sold.
With large buyouts, PE funds usually charge investors a fee of around 1.5 to 2 percent of assets under management, plus 20 percent of all profits (subject to achieving a minimum rate of return). Fund mostly profit through capital gains on the sale of portfolio companies.
How Private Equity Improves ValueREAD MORE >>
Benchmark International has successfully negotiated the sale of Conarc, Inc. (“Conarc”) to Swiftcurrent Holdings, Inc. (“Swiftcurrent”), an affiliate of ESW Capital, LLC ("ESW"). The transaction represents the conjoining of two best-of-breed solution providers.
Based in Alpharetta, Georgia, Conarc develops and sells client management software solutions used in a variety of industries including finance/accounting, real estate, healthcare and insurance. Conarc’s flagship content collaboration software product, iChannel, was built from the ground up by the Conarc development team, allowing the company the flexibility to offer a multifaceted solution with the ability to customize features to client specifications. Additional programs within the Conarc suite of products include a customer relationship management solution, workflow module, a file management system and multiple finance and accounting database products.
For nearly 20 years, Conarc has been committed to finding innovative ways to connect people, businesses, and ideas. With a current presence throughout the United States and Canada, Conarc remains dedicated to continuing improvement and growth.
Based in Austin, Texas, Swiftcurrent is part of the ESW Capital group (www.eswcapital.com) and is specifically focused on acquiring and growing industry-focused business software companies. ESW buys, transforms, and runs mature software and technology companies. By taking advantage of its unique operating platform, ESW revitalizes its acquisitions for sustainable success while making customer satisfaction a top priority. ESW and its affiliated companies have been in the enterprise software space since 1988, and the group includes notable brands such as Trilogy, Aurea, Versata, and Ignite Technologies.
Benchmark International’s Tyrus O’Neill acted as the lead on this transaction and was successful in pinning down the needs of both parties involved, “This is one of those transactions where the parties were truly a good fit right from the start.” O’Neill stated, “On behalf of Benchmark International, we are thrilled to have been able to work alongside our client, Conarc, in this transaction. Chet Joglekarhas built a tremendous suite of software solutions and we believe it is a perfect fit for Swiftcurrent.” Senior Associate, Sunny Garten, added, “We have really enjoyed working with our client, Chet Joglekar, and would like to take this opportunity to wish both parties the best of luck moving forward.”
Conarc, Inc. CEO and Founder, Chet Joglekar, stated, “Benchmark International’s hands-on approach during all aspects of the transaction process was fundamental in our successful deal closing. Benchmark’s industry knowledge and relationships proved to be highly valuable as they assisted us in identifying a buyer that fits our innovative culture and provides Conarc with the resources necessary to continue the company’s trajectory of rapid growth.”READ MORE >>