Glossary 5: Capital Structure and Private Equity Capital

Glossary 5: Capital Structure and Private Equity Capital

The capital structure of a company plays a crucial role in its financial stability and overall business performance. Private equity, or “Đầu tư vốn cổ phần chưa đại chúng,” introduces innovative instruments like mezzanine debt and hybrid equity, significantly impacting a firm’s financial stability. Mezzanine debt, being a blend of debt and equity, offers companies an intermediate financing option, allowing them to leverage without diluting ownership. Hybrid equity instruments combine features of both debt and equity, providing flexibility in capitalizing the business. By incorporating these private equity tools, companies can optimize their capital structure, mitigating risks and enhancing financial resilience. This strategic approach often leads to improved business performance as it empowers companies to fund expansion, innovation, and operational enhancements. Private equity instruments contribute to a well-balanced capital structure, enabling companies to navigate dynamic market conditions and pursue sustainable growth.

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