A private equity firm takes an interest in a company that is not listed publicly and works to turn the company around or grow it. Private equity firms raise funds in the form an investment fund with a defined structure, distribution system and then invest it in their chosen companies. The fund’s investors are known as Limited Partners, and the private equity firm acts as the General Partner in charge of buying, managing, and selling the targets to maximize returns on the fund.
PE firms are often criticized for being ruthless and pursuing profits at all cost, but they are armed with vast experience in management that allows them to enhance the value of portfolio companies by improving operations and supporting functions. They can, for example assist a new executive team by guiding them through the best practices in corporate strategy and financial planning and assist in the implementation of more efficient IT, accounting, and procurement systems to lower costs. They can also increase revenue and find operational efficiencies which can help improve the value of their assets.
Private equity funds require millions of dollars to invest, and it can take them years to sell a company in a profit. This is why the business is highly inliquid.
Working for a private equity firm usually requires previous experience in banking or finance. Associate entry-levels are primarily responsible for due diligence and finance, while senior and junior associates are accountable https://partechsf.com/generated-post-2 for the interaction between the firm’s clients and the firm. Compensation for these roles has been on an upward trend in recent years.