All things being equity: When selling a stake can help firms grow

Bringing new equity into a business has pros and cons but the right plan can make it profitable for founders and investors

Timing is key when choosing to divest some equity in your business.

Equity means different things to different people, though essentially it means your percentage ownership of a company, says John O’Sullivan, managing director, Focus Capital Partners.

“If you’re a founder equity means control and likely a material amount of your net worth is tied up in the equity of the company,” he adds. “If you’re an investor, then equity will likely have a different meaning, viewed as a passive and or strategic investment, and in the context of professional investors it’s likely they have many equity holdings spread across an investment portfolio.”