A private equity company takes the ownership of a business that is not publicly listed and then is able to turn the business around or increase its size. Private equity firms typically raise funds through an investment fund with a clearly defined structure and distribution system and then invest the funds into their target companies. Limited Partners are the investors in the fund, and the private equity firm is the General Partner responsible for buying selling, managing, and buying the see post targets.
PE firms are sometimes critiqued for being uncompromising in their pursuit of profits, but they often have extensive management expertise which allows them to enhance the value of portfolio companies by implementing operations and other support functions. They can, for instance help guide a new executive team through the best practices in financial and corporate strategy and assist in the implementation of more efficient accounting, IT and procurement systems to lower costs. They can also increase revenue and identify operational efficiencies, which can help them increase the value of their assets.
Private equity funds require millions of dollars to invest, and it can take them years to sell a business at a profit. The industry is therefore highly liquid.
Private equity firms require previous experience in banking or finance. Associate entry-levels focus on due diligence and financing, while junior and senior associates concentrate on the relationship between the firm and its clients. In recent years, the pay for these positions has increased.
Recent Comments