Private equity : the essence

Abstract

The objective of this paper is to unveil the Private Equity industry. The main goal of this paper is to provide the reader with a new perspective about Private Equity, so he/she can move from the typical analytical perspective, which will be of course present, to a more practical viewpoint. Ultimately, this paper is intended to enable the reader to picture the practical and strategic approaches and day to day operations that Private Equity funds experience. This paper firstly covers the investment categories, from where PE Funds usually operate, to then go through the natural steps that any Private Equity fund would need to take in order to start investing. Once this has been done, I will walk through the origin and evolution of the Private Equity Industry and I will assess the drivers that have pushed PE along the two main waves it has experiences. After this, and in order to contextualise this paper, I will recognise the potential threats the measures of PE performance may face nowadays, whilst assessing the different measures of performance that are particular to this industry. To continue, I will illustrate the different purchase strategies that PE Funds follow when investing and, in order to conclude, I will explain the different exits that are available to PE Funds when divesting assets.