Private equity firms invest in companies which are not publicly traded, and then work to grow or turn them around. Private equity firms raise capital in the form of an investment fund with a defined structure, distribution waterfall, and then invest it in their target companies. Limited Partners are the investors in the fund, and the private equity firm is the General Partner accountable for buying selling, managing, and buying the targets.
PE firms are often https://partechsf.com/keep-your-deals-moving-via-the-best-data-room-service/ accused of being ruthless in their pursuit of profits, but they often have extensive management expertise that allows them increase the value of portfolio companies by implementing operations and other support functions. They can, for instance guide a newly appointed executive team through the best practices in financial and corporate strategy and assist in implementing streamlined IT, accounting, and procurement systems that reduce costs. They can also find operational efficiencies and boost revenues, which is one way to improve the value of their holdings.
Private equity funds require millions of dollars to invest and it can take years to sell a company in a profit. In the end, the business is highly inliquid.
Working at a private equity firm typically requires prior experience in banking or finance. Associate entry-levels are primarily responsible for due diligence and finance, while senior and junior associates are responsible for the relationship between the clients of the firm and the company. In recent years, the pay for these roles has increased.
