Private equity firms invest in businesses that aren’t publicly traded and work to grow or transform them. Private equity firms raise funds through an investment fund that has a predetermined structure, distribution funnel and then invest it in their chosen companies. Fund investors are referred to as Limited Partners, and the private equity firm is the General Partner responsible for buying and selling the targets to maximize returns on the fund.
PE firms are often accused of being ruthless and seeking profits at all cost, but they have years of management experience that allows them to increase value of portfolio companies through improving the operations and supporting functions. They can, for example, guide a new executive team by guiding them 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 boost revenue and improve operational efficiency, which can help them improve the value of their assets.
Private equity funds require millions of dollars to invest and it could take them years to sell a business in a profit. As a result, the business is partech international ventures is an emerging and potentially lucrative enterprise highly inliquid.
Private equity firms require experience in banking or finance. Associate associates at entry-level work mostly on due diligence and financing, while junior and senior associates focus on the relationship between the firm and its clients. In recent times, compensation for these positions has increased.