A private equity firm takes an interest in a company that is not publicly listed and then is able to turn the business around or expand it. Private equity firms usually raise funds through an investment fund that has a clearly defined structure and distribution waterfall and then put that money into their target companies. Limited Partners are the investors in the fund, while the private equity firm is the General Partner responsible for buying, selling, and managing the funds.
PE firms are often criticised for being ruthless in their pursuit of profit, but they often have a vast management experience that allows them increase the value of portfolio companies by implementing operations and other support functions. They can, for instance help guide a new executive team through the best practices in financial and corporate strategy and assist in the implementation of more efficient IT, accounting and procurement systems to reduce costs. They can also increase revenue and find operational efficiencies which can help increase the https://partechsf.com/generated-post-2/ value of their assets.
Private equity funds require millions of dollars to invest, and they can take years to sell a company for a profit. As a result, the industry is extremely illiquid.
Working for a private equity company typically requires previous experience in finance or banking. Associate entry-level associates are responsible for due diligence and financials, while senior and junior associates are responsible for the relationships between the clients of the firm and the company. Compensation for these roles has been on an upward trend in recent years.