Financial Accounting An Introduction- Evan Vitale

Every Business persons wants to maintain his reputation amongst the market and also wants to expand in the economic level. For this purpose, Evan Vitale ensures best practices to be followed for a better marketing strength and for explosion of new opportunities that may help to lead your business at global level.

Check out this video on an introduction to financial accounting by Evan Vitale:

 

2015 Venture Capital & Private Equity Country Attractiveness Index

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Knowing when to invest and where are sometimes difficult. You have to assess which countries offer the most promising markets and which ones have the biggest entrepreneurial support. The place where you choose to invest your money has to have a strong incentive or reason to invest with protection and venture support.

The 2015 Venture Capital and Private Equity (VC/PE) Country Attractiveness Index recently released a running list from best to unfavorable countries to place investments. Of the 120 countries analyzed, the United States, the United Kingdom, Canada, Singapore, and Japan ranked at the very top. Conclusions were made based on thousands of data points and each country’s overall attractiveness to VC/PE investors. This index is not only important to investors, but regulators who can use the information provided to set new policies or revise old ones to help create a more desirable package for investors.

In addition to well established “green light” markets, private equity investors have the ability to keep an eye on emerging markets with acceptable risk to reward ratios. Current emerging markets are Mexico, Indonesia, the Philippines, Nigeria, Turkey, and South Africa. Countries like China, Russia, India, and Brazil have been in the ranks for a while now, with China leading the way as most attractive. Although investors can sometimes jump the gun, or present themselves as overly enthusiastic for emerging markets, investing in them is the only way to jump start the process and potentially reap the extraordinary reward of being an early adapter.

As for the 2015 ranking, here are the top 10 attractive investment locations:

  1. United States
  2. United Kingdom
  3. Canada
  4. Singapore
  5. Japan
  6. Hong Kong
  7. Germany
  8. Australia
  9. New Zealand
  10. Switzerland

And here are the 10 lowest ranking locations:

  1. Burkina Faso
  2. Mali
  3. Venezuela
  4. Benin
  5. Lesotho
  6. Syria
  7. Mauritania
  8. Chad
  9. Angola
  10. Burundi

For more information, be sure to check out the 2015 index here: The Venture Capital & Private Equity Country Attractiveness Index

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Private Equity on the Rise

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After the global financial crisis the most important lesson learnt by the business world was – Expect the Unexpected. In a post global financial meltdown environment many private equity firms today are operating within limits and under ever increasing uncertainty.

Keeping in view this scenario how do businesses balance buy and sell side opportunities and more importantly how do they expand into new markets and diversify into new revenue channels when now more than ever the focal point of all business is keeping a check on their existing portfolio’s while at the same time meeting up the to the challenge of new regulatory frameworks and risk management techniques.

It is important for businesses to gain a perspective, even though after the market turmoil faced and the industry left reeling, many groups are now coming forward and looking into deals and opportunities.

In the light of macro-economic uncertainties it is important to point out that private equity companies similar to that of other industrial giants are just as much exposed. Within this frame it is also important to consider the issue and impacts of sovereign debt within the US and European Union which is just coming up to the horizon.

However in the light of the above issues it is still seen that private equity is able to demonstrate a certain level of resilience and nimbleness with an ability to withstand shocks. Keeping this in mind, it is no surprise that most private equity investors have been able to come out of the recession with a renewed sense of aggression and focus on organic revenue growth. The key however to this is applying and taking up more entrepreneurial experts and mindsets from the market and adding them onto your portfolio.

We will for sure see private equity on the rise again as they take the helm as companies who are able to demonstrate an active ownership skill, this is evident from examples which can be taken from North America and Europe on how private equity creates value. This inevitably has an effect and enables them to create more stronger and profitable businesses.

Coming back to point of expanding, it is seen that institutional investors are now taking an active part in Latin America’s growth and that of Brazil in particular. As a result a surge has been noted in their keenness on expanding private equity programs in this region.

On the other hand Risk, Regulation and Compliance also play an important role. This is especially when considering market volatility and pricing pressures – these are tools which are usually in play to create competition and opportunities. Businesses on the whole need to develop strategies in order to provide a balance between risk and opportunity.

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Accounting for Startups

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There is no better feeling like bringing home a newborn baby for the first time, the first and most common thing you will probably do is to check if your baby is healthy and well. You may perform several tests like checking their breathing patterns and heart rate, and then compare it to the typical rate for newborn babies. As time goes on and your child ages, you’ll learn new methods for checking your child’s health and condition. This can include their mental, physical and emotional health and development.

This can be compared to when you just started a business, your accounting needs will grow as your business grows and become more and more complicated. Brian Hamilton, the chairman of financial information company Sageworks has mentioned that one of the most common mistakes new entrepreneurs make is that they feel that they don’t need an accountant or that accountants aren’t necessary until their business has grown to mature a bit more.

Bran Hamilton has stated “Most businesses are very simple, and the vast majority of them are sole proprietorships.” This results in the mindset that their primary focus should be to increase revenue and gain new clients. “In most cases, you don’t need an accountant on day one. If I’m going to start, for example, a landscaping company, I’m not going to count money until I make money.”

There are a variety of available accounting systems, including Xero, Peachtree and QuickBooks, all of which can assist the new business owners in handling accounting related affairs such as recording sales and expenses and their growth over time. Developers of tax-preparing software like Intuit ensure that sole proprietors submit their Form 1040 along with a Schedule C attached.

At some point, the questions get asked “If you’re running a fairly simple business, why do you need an accountant on the first day?” You might need an accountant for advice, because you usually need advice once you get going. Accountants handle more than just your business’s financial information, they can provide strategic advice regarding how best to run your business from a financial point of view. Also, if you decide to obtain a loan or purchase property to expand your business, accountants can provide invaluable advice.

However, it is important to understand that an accountant is needed most during different stages of the business cycle, and can also depend on the type of business. The most common strategy for new business owners is to start a business and run straight for new clients and sources of revenue.

Brian Hamilton says, “A lot of the time, entrepreneurs and others seem to have a kind of checklist in their head about what ‘real’ businesses do and have. They think that all businesses ‘need’ an accountant, a lawyer, a business plan, to be incorporated. All they’re doing is setting big obstacles to getting the first customer.” The best approach in simple terms is to gain new clients and then look for an accountant.

To determine how well a business is performing, private-company owners will consistently check a few key financial metrics. The most common being sales as that is what determines the revenue of a business. For most, tracking sales is simple and shouldn’t require extensive analysis unless your business is offering credit to customers or is project-based. Just by recording your business costs and revenue from all sources it will allow you to keep track of your profit.

In order to determine your profitability, there are two key factors to keep an eye on.

Gross margin: This is a company’s revenue minus total costs directly involved in producing the product or delivering the service, divided by revenue. This shows what percentage of sales is left over after direct costs, and it’s an important measure of efficiency. Examining this can guide you on when you need to adjust prices or volume in order to keep more of what you sell.

Net margin: This is a company’s net profit measured against sales and takes into account all expenses related to the business (such as bank fees and other general overhead). This margin tells you how much of every dollar in sales your firm is keeping after all expenses are paid.

Other metrics become more important to understand and track as the business grows. The best time to start tracking such metrics depends entirely on which stage the company is in, and the type of company. However, when it comes to new companies and are developing the ideas behind their company, the key metric they track is sales.

 

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Individual Investors Take a Bigger Role in Private Equity Space

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Wall Street’s private equity firms are raising an increasing share of their capital from individual investors, according to a new report published by Triago, a private equity advisory firm. Triago gathers its data from funds it works with or has knowledge of, and extrapolates from there.

Typical private equity firms have traditionally depended on pension funds and other institutional investors to raise capital. These institutions are compatible with private equity because they can afford to lock away their capital for as long as a decade, the time frame often required.

However private equity firms are seeing an opportunity to raise capital from individual investors in order to fund their deals. According to Triago, in the first 10 months of this year, individuals with more than $1 million in investable assets provided 10 percent of the capital raised by private equity firms globally. By contrast, such wealthy individuals provided just 6 percent of the industry’s capital in 2008.

Institutions are still the primary source of private equity capital, but some of the biggest firms now view individual investors as a potentially lucrative source of additional assets under management. When private equity firms gather more capital, they can earn more in management fees.

This shift comes at a time when institutional investors are wielding significant leverage, Triago noted in its report. Major institutions can sometimes demand, for example, that their money be placed in separate accounts that charge lower fees. Individuals, for the most part, have no such bargaining power.

Private equity firms have established “well-oiled partnerships” with brokerage firms in order to raise capital from individuals. Demand appears to be extremely robust. As an example, Blackstone, the biggest private equity firm, is using its partnership with Morgan Stanley to raise capital from individuals for a new energy fund.

Another major firm, the Carlyle Group, is introducing a new way to give individual investors direct access to a selection of its private equity funds. That program, called Carlyle Private Equity Access 2014, is intended to recur annually.

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Florida Reaps Sliver of US Venture Capital

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Florida reaped just a tiny sliver – about a third of 1 percent – of the U.S. venture capital pie in the third quarter, according to statistics released Friday. In the state, $36.7 million was invested in six deals. That’s down considerably from $113.9 in 13 deals last quarter and the lowest total since the first quarter of 2013.

Florida companies receiving dollars in the third quarter were: Sancilio & Company ($20 million); LensAR ($7.85 million); Informed Medical Decisions ($5 million); OBMedical ($2.1 million); Neoreach ($1.5 million); and Contactus.com ($300,000).

Next quarter’s Florida numbers are likely to look off the charts with reports that Google Ventures and Andreessen Horowitz are involved in a $500 million round for Broward-based Magic Leap, the cinematic reality company founded by Rony Abovitz, cofounder of Mako Surgical. Magic Leap closed a $50 million Series A round in February.

So far in 2013, $232.3 million has flowed into Florida-based companies.

Nationally, venture capitalists invested $9.9 billion in 1,023 deals in the third quarter, according to the MoneyTree Report from PricewaterhouseCoopers LLP and the National Venture Capital Association, based on data provided by Thomson Reuters. Quarterly venture capital investment declined 27 percent in terms of dollars and 9 percent in the number of deals, compared to the second quarter when $13.5 billion was invested in 1,129 deals.

The third quarter is the sixth consecutive quarter of more than 1,000 companies receiving venture capital investments in a single quarter. With more than $33 billion invested through the first three quarters, total venture investing in 2014 has eclipsed total venture investing in all of 2013, which totaled $30 billion.

“The emergence of non-traditional investors, including hedge funds and mutual funds, is contributing to the increase in venture investing this year. Another factor that can’t be ignored is the changing nature of our economy, where startup companies are disrupting entrenched industries and, in some cases, creating new industries altogether,” said Bobby Franklin, president and CEO of NVCA, in a statement.

“Another factor driving the strong investment levels is the increasing prevalence of mega deals, deals exceeding $100 million, which we’ve seen over the past few quarters. We’ve already counted more than 30 mega deals in 2014 compared to only 16 in all of 2013,” said Mark McCaffrey, global software leader and technology partner at PwC.

The biggest deals were Vice Media ($500 million); Palantir ($165 million), Houzz ($165 million), Box ($158 million) and Lookout ($150 million). Next quarter Magic Leap will likely be joining the top five list.

MoneyTree Report results can be found at www.pwcmoneytree.com and www.nvca.org.

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Bramson and Electra Butt Heads Again

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Edward J. Bramson, the managing member of Sherborne Investors Management, already made a play earlier in the year to get three seats on the board of Electra Private Equity. His request for the seats was rejected. But that didn’t stop him from trying again.

Ian Brindle used to be the chairman of Pricewaterhousecoopers Britain but he is now seeking a seat on the board at Electra

Ian Brindle used to be the chairman of Pricewaterhousecoopers Britain but he is now seeking a seat on the board at Electra

This time, he is only after two seats on the board of the prestigious private equity firm, one for himself and one for a friend and associate, Ian Brindle. Brindle once was the chairman of PricewaterhouseCoopers in Britain and has long been an associate of Bramson. To get them he has employed some rather grand tactics.

He sent a letter to all of Electra’s shareholders last week and said, in not so many words (or maybe in more) that if they wanted to see a gain of over one billion pounds, they should remove the current director Geoffrey Cullinan and vote to have himself and Brindle join the board. Electra did not hesitate to fire back. The Electra chairman, Roger Yates said, “We are surprised that Sherborne’s letter demonstrates considerable misunderstanding of how Electra works. Exuberant and unsubstantiated claims are no substitute for Electra’s consistently superior track record. Your board aims to continue this record without the destabilizing efforts of Mr. Bramson. The board of directors of Electra strongly urges all shareholders to vote against the resolutions.”

It is true that Bramson did not outline anywhere in his letter a plan to raise the value of the shares the billion pounds that he claimed he could, but that might not stop investors from voting him in anyway. After all, an investor should theoretically care less about who makes the money as long as they make it (barring criminal activity, of course). And one billion dollars is a lot of money.

Curious members of the public will have to wait until October 6th, the date of the next shareholders meeting, to see what happens.

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