Private Equity 101: What you need to know about this investment capital source

Post date: Oct 23, 2017 1:3:45 PM

Private equity essentially refers to any fund that pools money from various investors. The collated money, often in the millions of dollars, are then used to acquire stakes in recognized companies or businesses.

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It’s important to note that, in concept, it is very similar to venture capital. However, private equity has more to do with established, revenue-generating businesses that hope to increase their worth. Venture capital, as the name suggests, sets its eyes more on newer companies that are often into bold, new technologies.

Those who opt for private equity are into the rationale that an established business needs an infusion of new investment to get revitalized. This often comes hand-in-hand with acquiring a new executive. Private equity firms would sometimes offer to outright buy a company or its founder to foster changes. Other strategies include providing expansion capital or recapitalization to a struggling business.

Private equity is a form of leveraged buyout, granting an existing business important cash infusion especially when long-term investors are already asking for returns. This alternative fund type injects fresh ideas and innovative strategies and often brings in new managers to give businesses a new lease on life.

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Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC. The company was established in 2008 with the intent of providing quality, outsourced solution to meet the dynamic back office needs of the alternative fund industry. For more industry updates, check out this Twitter page.