A private equity firm takes an interest in a company that is not listed publicly and attempts to turn the company around or to grow it. Private equity firms typically raise funds through an investment fund with an established structure and distribution plan, and then they invest that capital into the target companies. Limited Partners are the investors in the fund, whereas the private equity firm is the General Partner, responsible for buying selling, managing, and buying the targets.
PE firms are sometimes critiqued for being uncompromising in their pursuit of profit They often have a vast management experience which allows them to enhance the value of portfolio companies through operations and other support functions. They could, for example help guide a new executive team through the best practices in financial strategy and corporate strategy and assist in implementing streamlined IT, accounting, and procurement systems to lower costs. They can also increase revenues and discover operational efficiencies, which can help them increase the value of their assets.
Unlike stock investments that partech international ventures can be converted quickly into cash and cash, private equity funds generally require a large sum of money and may take a long time before they can sell a target company at an income. In the end, the industry is extremely illiquid.
Working for a private equity company typically requires previous experience in banking or finance. Entry-level associates work primarily on due diligence and financing, while junior and senior associates concentrate on the relationship between the firm and its clients. In recent years, the compensation for these positions has increased.