Private Equity Essay Example | Topics and Well Written Essays - 3000 words

Private Equity - Essay Example This process normally involves substantial borrowings and is therefore described as Leveraged buyouts (LBO). Another term which is normally used is â€Å"taken private† which relates to a buyout of a public company and in the process removing it from the stock exchange listing, and therefore transforming it into a private firm (Fraser-Sampson, 2007). Public companies are normally taken private because they have the potential of providing substantial cash flows to investors as the shares are currently undervalued on the stock market. The managers see the potential of â€Å"significantly boosting the firm’s value under private ownership† (Brigham and Ehrhardt 2005, p. 664). This means that companies taken private have the potential of enriching not only the managers who take part in the buyout but the public shareholders who are often offered prices higher than the going market price to sell their shares. Sometimes these shareholders resist but in the end they have to sell their shares because the buyers have enough of the company’s shares to sufficiently influence the takeover of the public company. A large number of public companies have been taken private over the years. A list of some of these companies is provided in Appendix 1 and 2. This list is by no means exhaustive but gives an indication as to the level of activities taking place as it relates to these types of transactions. Arguments for and against public to private transactions A number of arguments have been levelled against public to private transactions. However, there have also been several arguments in its favour. According to Becky (2002, Private vs. Public †¦) â€Å"†¦ in the 1980s a lot of public companies were taken private through a process called a leveraged buyout. That trend may have benefited the entire economy by making the companies a good deal more efficient.† Arguments against public to private transactions Opponents to public companies being taken over by private equity have levelled a number of criticisms against these types of transactions. They believe that some of these private equity managers actually buy public companies, reduce employees, strip the companies of assets and then sell them in secondary buy-out deals. Some also indicate that they are allowed to set off interest payments against income and in the process paying less tax. According to Wiley (2007, p.79) â€Å"some countries are pursuing tougher and tighter ‘thin equity’ tax rules under which it can be difficult to make loan interest fully deductible.† Adding value by increasing earnings multiple Some of the opponents of these types of transactions have indicated that there are many ways the managers of public companies could add value to the company instead of allowing them to go private. These include taking out loans instead of issuing more shares which would be favourable to shareholders as they would see their earnings per share increase. These companies would also pay less tax because the interest on these loans is tax deductible. Increasing the cash flow of the Company Cash flow can be improved through proper management of public companies. There is normally unpredictability in the levels of cash flow in public companies that have been taken private and which therefore need to make regular interest payments. Debt added to private company These purchases normally take place with the use of large amounts of debt, referred to as leveraged

Context of Workplace Education and Training Essay 2 (3000words)

Context of Workplace Education and Training 2 (3000words) - Essay Example rced to restructure, augment and reshape their economic and labor strategies as investors turned more and more to underdeveloped countries to bring their capital where labor is less costly. The Australian government was compelled to grapple with these new realities as unemployment rate rose from 1.6% in 1970 and peaked at 10.1% in 1992. The workforce had to be retrained to be more competitive. It was in this context that Australia adopted and implemented the Vocational Training and Education system. VET is a system of education incorporated into school curricula and workplace trainings that aims at preparing the student or the worker with the necessary competency that will hone them into competent members of the workforce able to compete in the global arena. The Australian VET is characterized by its nationally unified system, Competency-Based Training (CBT) and Work-Based Learning (WBL). Globalization, the VET and other related concerns have impacted even on established Australian i ndustries like Travelex. Travelex is one of the world’s biggest foreign exchange companies. It was founded by Lloyd Dorfman of London in1976 which initially made a breakthrough into the airport scene in 1986 in Heathrow Airport, an arena used to be monopolized by clearing banks. In 1989, it set up foreign exchange units in Australian airports under permission from the Ansett Airlines, operator of the Australian airport terminal. Today, the company operates in 93 airports around the world, has presence in about 30 countries in the world and employs about 6000 people. Australia is its third biggest market (History of Travelex). The Travelex business has three divisions. The Global Business Payments division accepts commercial and personal clients’ requests to service payments in almost all parts of the globe in their preferred currencies. The Retail Division, the largest in the world, which has 700 branches all over the world, sells banknotes and foreign exchange in most currencies