A private equity firm acquires an ownership stake in a company which is not listed on the stock exchange and attempts to turn the company around or expand it. Private equity firms raise capital in the form an investment fund with a defined structure, distribution waterfall, and then invest it in the companies they want to invest in. Limited Partners are the investors in the fund, whereas the private equity firm is the General Partner, responsible for purchasing, selling, and managing the targets.
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, guide a new executive team by guiding them through the best practices in financial strategy and corporate strategy and assist in implementing streamlined IT, accounting and procurement systems to cut costs. They can also increase revenue and identify operational https://partechsf.com/partech-international-ventures-is-an-emerging-and-potentially-lucrative-enterprise-offering-information-technology-services efficiencies, which can help them improve the value of their assets.
Private equity funds require millions of dollars to invest and it can take years to sell a business for a profit. The sector is, therefore, highly in liquid.
Private equity firms require prior experience in finance or banking. Entry-level associates work primarily on due diligence and financing, while junior and senior associates focus on the relationship between the firm and its clients. Compensation for these positions has been on an upward trend in recent years.