Understanding financial news is a key part of participating in the stock market. Unfortunately, Wall Street often describes business activities in less-than-clear terminology. Read on to learn more about three common business terms that will help you make sense of your investments.
What Are Advisory Firms?
Consulting and advisory firms provide various professional services to corporate clients. They help companies communicate better with customers and shareholders, conduct the research that businesses use to make decisions about their investments and provide clients with expert advice on improving their management and strategy decisions.
Many of these firms also work with nonprofits; for instance, Teneo’s Declan Kelly has a longstanding relationship with advocacy network Global Citizen. Declan Kelly, who founded the company, has years of expertise in international business, allowing Teneo to meet the needs of clients all over the world, a capacity essential for any advisory firm’s success.
What is Private Equity?
You’ve probably heard of several private equity firms like Blackstone or Bain Capital. These firms use investor funds to buy out publicly traded companies and take them off public exchanges or to make capital investments in private businesses. The “private” in private equity simply means that the capital isn’t listed on any public exchanges. Although there are many types of private equity, such as venture capital, you’ll encounter this term most often when it’s used to describe buyouts of struggling companies by larger firms that may be able to return them to profitability.
What is Venture Capital?
Private equity and venture capital both involve third-party investments, but venture capital is spread over several newer companies that demonstrate growth potential, and venture capitalists usually hold less than 50% equity in those companies, allowing the founders of those companies to retain some control. Private equity usually involves a complete takeover of a single company. Venture capital is also concentrated in tech startups, whereas private equity portfolios span broader industries.
Wall Street terminology might have a steep learning curve, but there’s no reason you can’t learn what you need to know to keep up with stock market trends and achieve your financial goals.
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