Private equity firms invest in businesses which are not publicly traded and then work to expand or turn them around. Private equity firms usually raise funds in the form of an investment fund with a clearly defined structure and distribution waterfall and put that money into their target companies. The investors in the fund are referred to as Limited Partners, and the private equity company is the General Partner in charge of buying and selling the target companies to maximize the returns on the fund.

PE firms can be accused of being ruthless and seeking profits at all cost, but they possess extensive management experience that allows them to increase value of portfolio companies through improving the operations and supporting functions. They could, for example guide a newly appointed executive team by providing the best practices for financial strategy and corporate strategy and assist in the implementation of streamlined IT, accounting and procurement systems that reduce costs. They can also increase revenue and improve operational efficiency which can https://partechsf.com/keep-your-deals-moving-via-the-best-data-room-service help increase the value of their assets.

Private equity funds require millions of dollars to invest and it can take them years to sell a business in a profit. This is why the business is highly inliquid.

Private equity firms require experience in banking or finance. Associate entry-level associates are mostly responsible for due diligence and finance, while junior and senior associates are accountable for the interaction between the firm’s clients and the firm. Compensation for these roles has been on an upward trend in recent years.