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A private equity firm takes the ownership of a business that is not publicly listed and seeks to turn the company around or expand it. Private equity firms raise funds in the form an investment fund that has a clearly defined structure, distribution waterfall and then invest it in the companies they wish to invest in. Investors in the fund are referred to as Limited Partners, and the private equity firm serves as the General Partner, responsible for buying and selling the funds to maximize returns on the fund.

PE firms are sometimes accused of being ruthless in their pursuit of profits However, they typically have a vast management experience that allows them to increase the value of portfolio companies by implementing operations https://partechsf.com/partech-international-data-room-do-it-yourself/ and other support functions. For instance, they could guide new executive staff through the best practices in corporate strategy and financial management and assist in implementing streamlined accounting, procurement, and IT systems to drive down costs. They can also identify operational efficiencies and boost revenues, which is one way they can improve the value of their holdings.

Private equity funds require millions of dollars to invest and it could take them years to sell a business with a profit. As a result, the industry is highly illiquid.

Working at a private equity firm usually requires previous experience in banking or finance. Associate entry-level associates are responsible for due diligence and finance, while senior and junior associates are responsible for the relationship between the firm’s clients and the company. Compensation for these roles has been on an upward trend in recent years.