- Private Equity understands the power of potential and thus tries to look beyond what meets the eye. A combination of knowledge and entrepreneurial instinct helps PE look harder, delve deeper and identify opportunities that may appear unexciting on the surface, but have the potential to deliver extraordinary results.
- The majority of private equity consists of institutional investors and accredited investors who can commit large sums of money for long periods of time. Private equity investments often demand long holding periods to allow for a turnaround of a distressed company or a liquidity event such as an IPO or sale to a public company.
- Private equity is equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies. Capital for private equity is raised from retail and institutional investors, and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet.
- Buy low, sell high. Private equity (PE) investors are by nature patient. This characteristic leads them to choose opportunities whereby they can buy something of value at a discount, nurture it and wait for it to appreciate to where it can be sold for a profit. The sooner this happens the better, but most PE investors are prepared to wait, place more capital into the enterprise if necessary, and help to maximize the value of their investment.
- The potential shopping list is magnitudes greater than the public markets. Anything private, from a small company up to the largest division of a multi-national conglomerate can become a PE opportunity. Even public companies looking to go private can turn to PE firms or investors for help.
- Transparency and accountability. PE investors can also dictate terms much more easily, and hold management accountable to performance targets and milestones. They can negotiate seats on the board and wield a lot more power than a public company shareholder. With the PE investments we hold, a direct line to the CEO, CFO and anyone else we want to talk to within the company is guaranteed.
- Prefer PE deals to public deals because of the control we have. Yes, we are tied up for years in most deals, but we know what is going on, week-to-week, month-to-month. I’ve never felt that same control when I’ve owned a public equity.