This video on Private Equity explains all the nuances of private equity, what it is, how it functions, and the life cycle of a private equity fund in a simple way.
What is Private Equity?
Private equity is a financing methodology that primarily focuses on investing in private companies that are not listed publicly. The main objective is to propel the company’s growth and improve it until it is ready to go public.
Partners involved in Private Equity
Most private equity funds have a general partner who contributes up to 1% to 3% of the total funds. They help in maintaining the fund and decide where to invest the fund, and analyze the portfolio company. Other investors are called the Limited partners who invest in the company and expect the returns based on the investment.
The private equity firm invests in the company after assessing the portfolio using multiple techniques.
Pros and Cons of Private Equity
– PE funds provide the required capital for the company, which has significant growth benefits in the future for a long period or short period in exchange for fees and profit.
– In the longer term, it may be very much successful based on the company growth.
– This is a fantastic opportunity for the portfolio company to get the required funding and guidance to succeed.
– On the other hand, this may be a risky affair for the investing company as a failure may result in significant losses, and success may fill the pockets abundantly.
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For more details, you can refer to our article – https://www.wallstreetmojo.com/what-is-private-equity/
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