Private equity firms invest in businesses which are not publicly traded, and then work to grow or transform them. Private equity firms typically raise funds through an investment fund with a defined structure and distribution waterfall and invest that capital into the target companies. Limited Partners are the investors in the fund, while the private https://partechsf.com/the-benefits-of-working-with-partech-international-ventures/ equity firm is the General Partner, responsible for buying, selling, and managing the funds.
PE firms are often critiqued for being uncompromising in their pursuit of profits however, they usually have a vast management experience that allows them to increase the value of portfolio companies through operations and other support functions. For instance, they are able to walk a new executive staff through the best practices of financial and corporate strategy and help implement streamlined accounting procurement, IT, and systems to drive down costs. They also can find operational efficiencies and boost revenue, which is just one method to improve the value of their investments.
Private equity funds require millions of dollars to invest and it could take them years to sell a company for a profit. This is why the business is highly inliquid.
Working for an investment firm that deals in private equity typically requires prior experience in banking or finance. Associate entry-level associates are mostly responsible for due diligence and finance, while senior and junior associates are accountable for the relationship between the firm’s clients and the firm. In recent years, compensation for these positions has risen.
