Private equity firms invest in companies that aren’t publicly traded and work to expand or turn them around. Private equity firms raise funds in the form of an investment fund with a defined structure, distribution waterfall and then invest it in the companies they want to invest in. Limited Partners are the investors in the fund, and the private equity firm is the General Partner, responsible for purchasing selling, buying, and managing the targets.
PE firms are often critiqued for being uncompromising and seeking profits at all cost, but they possess extensive management experience that enables them to enhance the value of portfolio companies through improving the operations and other functions. They can, for instance assist a new executive team by providing the best practices for financial and corporate strategy and assist in the implementation of more efficient IT, accounting, and procurement systems to lower costs. They can also boost revenue and find operational efficiencies that can help them increase the value of their assets.
Unlike stock investments which can be converted in a matter of minutes to cash Private equity funds typically require a lot of money and may take a long time before they can sell a target company at an income. The industry is therefore highly in liquid.
Private equity firms require previous experience in banking or finance. Associate entry-level https://partechsf.com/ associates are principally responsible for due diligence and financials, while junior and senior associates are responsible for the relationship between the firm’s clients and the firm. Compensation for these roles has been on a rising trend in recent years.
