What is a financial investor?
The best-known type of financial investor is the traditional private equity fund, which generates value through the use of a high proportion of debt capital and a subsequent profitable resale. So-called evergreen funds, industrial holding companies, and family offices, as well as state-owned development banks and investment companies, also belong to this group despite their generally longer investment horizons. In addition, there are a number of specialized forms, such as investors specializing in individual projects or restructurings.
The Difference Between Strategic Investors and Financial Investors
Unlike a financial investor, a strategic investor is usually a competitor seeking to strengthen its own business model—either vertically or horizontally—through the acquisition of a company. Furthermore, strategic investors also invest in new business areas to offset fluctuations or declines in their traditional core business. For traditional financial investors, the prospect of increasing the company’s value is of central importance. Their approach is often exit-oriented. Evergreen funds, industrial holding companies, family offices, and private equity firms typically hold their investments over the long term and are less focused on a quick exit. However, due to their return requirements, they, too, have a strong interest in a continuous increase in enterprise value. Family offices, in addition, seek to diversify their assets.