Private Equity Explained
Private Equity or “PE” firms seek to make medium to long term equity investments in established companies with high-growth potential. Generally PE firms, through PE funds, invest in businesses which are further developed than those invested in by a Venture Capitalist.
A PE firm would typically look to make operational improvements to the business through active management of their investment over a period of three to seven years. At the end of this period they would look to sell their shares and exit the investment completely having seen the value of their stake grow. The exit outcome may be to sell on the business perhaps to a trade buyer or even another PE firm or by undertaking an Initial Public Offering of the shares.
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