Private equity firm
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A private equity firm is an
Typically, a private equity firm will raise pools of
Private equity firms, with their investors, will acquire a controlling or substantial minority position in a company and then look to maximize the value of that investment. Private equity firms generally receive a return on their investments through one of the following avenues:
- an initial public offering (IPO) — shares of the company are offered to the public, typically providing a partial immediate realization to the financial sponsor as well as a public market into which it can later sell additional shares;
- a merger or acquisition— the company is sold for either cash or shares in another company;
- a recapitalization — cash is distributed to the shareholders (in this case the financial sponsor) and its private-equity funds either from cash flow generated by the company or through raising debt or other securities to fund the distribution.
Private equity firms characteristically make longer-hold investments in target industry sectors or specific investment areas where they have expertise. Private equity firms and investment funds should not be confused with
Ranking private-equity firms
According to
Because private equity firms are continuously in the process of raising, investing, and distributing their private equity funds, capital raised can often be the easiest metric to measure. Other metrics can include the total value of companies purchased by a firm or an estimate of the size of a firm's active portfolio plus capital available for new investments. As with any list that focuses on size, the list referenced above does not provide any indication as to relative investment performance of these funds or managers.
See also
- History of private equity and venture capital
- Leveraged buyout
- List of private-equity firms
- Management buyout
- Private-equity fund
References
This article includes a list of general references, but it lacks sufficient corresponding inline citations. (April 2009) |
- ^ A primer: Hedge funds, private equity & venture capital, USA Today, August 17, 2007.
- ^ PEI 300: The world's largest private equity firms Private Equity International
Further reading
- "A Dignified Death: Hospices in the U.S. are increasingly run by for-profit providers, and a lack of regulation allows them to deliver abysmal end-of-life care", by the editors, nonprofithospices at record rates. This... has had pernicious effects on hospice care in the U.S." (p. 68.)
External links
- Private equity – a guide for pension fund trustees. Pensions Investment Research Consultants for the Trades Union Congress.
- Krüger Andersen, Thomas. Legal Structure of Private Equity Funds. Private Equity and Hedge Funds 2007.
- Prowse, Stephen D. The Economics of the Private Equity Market, Federal Reserve Bank of Dallas, 1998.