We continue with our discussion about Alternative Investments. Private Equity (PE) and Venture Capital (VC) are both forms of alternative investment in private companies, but they differ significantly in their approach and focus.
PRIVATE EQUITY: Unlocking Value in Established Companies
Private equity refers to investment funds that acquire private companies or take public companies private, to improve their value and eventually sell them for a profit. Private equity firms typically make these investments on behalf of institutional and accredited investors.
How Does Private Equity Work?
Private equity firms pool capital from institutional investors and high-net-worth individuals to acquire stakes in private companies or take public companies private. The goal is to improve the company’s operations, financial performance, and ultimately, its value.
Acquisition: PE firms buy controlling stakes in target companies, often using a combination of investor capital and debt.