Private equity firms invest in businesses that aren’t publicly traded, and then work to expand or turn them around. Private equity firms typically raise funds through an investment fund that has an established structure and distribution funnel, and then they invest the funds into their targets companies. Limited Partners are the investors in the fund, and the private equity firm is the General Partner responsible for buying selling, managing, and buying the funds.

PE firms can be accused of being ruthless and pursuing profits at all cost, but they are armed with extensive management experience that allows them to enhance the value of portfolio companies by improving the operations and supporting functions. They can, for example assist a new executive team through the best practices in corporate strategy and financial planning and assist in the implementation of streamlined accounting, IT, and procurement systems that reduce costs. They also can identify ways to improve efficiency and increase https://partechsf.com/generated-post revenues, which is one way they can enhance the value of their assets.

Private equity funds require millions of dollars to invest and it could take them years to sell a company for a profit. This is why the industry is extremely illiquid.

Working for a private equity company typically requires prior experience in banking or finance. Associate entry-levels focus on due diligence and financing, whereas junior and senior associates are focused on the relationship between the firm and its clients. Compensation for these roles has been on a rising trend in recent years.