The term “private equity” is thrown around a lot today, but most individuals have a foggy understanding of what the term actually means. In the broadest sense, private equity refers to money invested in private companies. A private equity firm, then, is a company that specializes in raising and managing investments in various, private business opportunities. This is accomplished by an investment manager who makes the principle investments in a business opportunity through a variety of strategies. Some of the common strategies used include leveraged buyouts, venture capital and growth capital.
But where how does a manager receive capital to invest? Typically a private equity firm will raise pools of capital from numerous sources like individuals, private groups and companies. These sources will come to the private equity firm in search of high returns. The firms receive a slice of the profits earned from the investments made, but the sources also pay the firm a management fee for their financial insight.
With their capital in hand, the private equity firms then acquire a position in a company in the hopes of maximizing the value of that investment. By implementing one of the different investment or management strategies the firm works to make the business more profitable then when they initially invested.
FNEX offers private equity firms the opportunity to source potential investments. If you are interested in evaluating investment opportunities, become a member of FNEX today.
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