May 7, 2017
Private equity is a $4 trillion global industry that entails investing in non-public companies through privately-negotiated transactions and results in the private ownership of businesses. The industry has grown exponentially over the past 30 years.
While most private equity transactions involve investments in private companies, they can range from the financing of start-up entities to infusing growth equity into an expanding company to buying out mature public or private enterprises. What is common to most private equity investments is that the investor group often acquires a large or significant ownership stake in the company through a highly structured and negotiated transaction.
Typically, private equity managers take an active role in monitoring and advising their portfolio companies. Through this hands-on approach, private equity managers seek to create value and enhance returns by directly influencing a company’s strategy and performance, as well as the timing of the exit from the investment, whether through a sale to a strategic (e.g., a corporation) or financial buyer (e.g., another private equity firm) or via an initial public offering (IPO).