We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Private Equity - Essay Example

Comments (0) Cite this document
Summary to essay on topic "Private Equity"
The term private equity describes investments for which there is no public market. Typically one invests either directly in the equity or convertible debt of private companies or in a private partnership, which in turn purchases such instruments. There are two principal sub-markets: venture investments in new or early stage companies and buyouts, which invest in corporate finance transactions (Bray,1997)…
Download full paper
Polish This Essay
Private Equity
Read TextPreview

Extract of essay "Private Equity"

Download file "Private Equity" to see previous pages... On average, private equity has produced very high returns with low correlations to public stocks and bonds and real estate. In other words, private equity offers the prospect of both high returns and increased portfolio diversification. In some cases, private equity may also provide collateral benefits,
Let us write or edit the essay on your topic "Private Equity" with a personal 20% discount.. Try it now
e.g., a vehicle to make economically targeted investments or to create or preserve union jobs. Finally, there is also the undeniable appeal of seeking innovative investments (Gompers, 2003).
1. Until the investments go public or are liquidated, investments are carried either at cost or at prices set by later rounds of financing. Except in this latter case, private equity is even harder to accurately value than real estate (Bray,1997).
2. Ultimate returns have varied (and are likely to continue to vary) widely by "vintage year," i.e., the year of initial investment, because of wide fluctuations in the business cycle. For example, the median 1986 private equity fund returned only 8.4% per year through 1997, whereas the median 1990 private equity fund returned more than 17% per year through 1997.
3. ...
(In statistical terms, the mean return is much higher than the median.) For example, for venture funds formed in 1988, an upper quartile manager returned almost 18% more per year than a lower quartile one from 1988 through 1997 (21.6% vs. 3.9%).
4. Reputation is very important: The best deals and the largest investment flows tend to go to firms with the best track records. Consequently (and quite unlike public equity markets), success tends to persist. The result, however, is that it is often difficult, if not impossible, for new investors to get into the best partnerships or deals. Here, the services of an established fund-of-funds manager can be of real value (Gompers, 2003).

Private equity (PE) buy-out deals have profound influence on domestic economies. Since the beginning of this year, they have accounted for more than one third of all deals that have been done on the New York stock Exchange1, and have raised $240 billion of cash for their acquisition plans2. The purpose of this report is to discuss the consequences of this type of buy-out on public markets, jobs, and tax revenues. Nevertheless, The effects of high leverage, which is used by PE firms to finance this class of acquisition, are beyond the scope of this report.

Private Equity investment used to be defined as "an equity investment in a company which is not quoted on a stock exchange". However, currently this definition has many limitations because it does not include investments that are structured as convertible debt and investments in public companies that are taken private3. For the purposes of this paper, Private Equity Buy-Out deal is a subset of ...Download file "Private Equity" to see next pagesRead More
Cite this document "Private Equity"
  • APA
  • MLA
(“Private Equity Essay Example | Topics and Well Written Essays - 3500 words”, n.d.)
Private Equity Essay Example | Topics and Well Written Essays - 3500 words. Retrieved from https://studentshare.org/miscellaneous/1510371-private-equity
(Private Equity Essay Example | Topics and Well Written Essays - 3500 Words)
Private Equity Essay Example | Topics and Well Written Essays - 3500 Words. https://studentshare.org/miscellaneous/1510371-private-equity.
“Private Equity Essay Example | Topics and Well Written Essays - 3500 Words”, n.d. https://studentshare.org/miscellaneous/1510371-private-equity.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Leveraged Buyouts and Private Equity
This research will begin with the explanation of leverage buyout. An organization is often taken over by a particular firm involved in investment activities. These firms use a comparatively tiny portion of equity and a comparatively large portion of outside debt financing. This type of activity is known as leverage buyout.
13 Pages(3250 words)Essay
Private Equity
In one instance the managers acquire all the equity of the company and in the other it does so with a small group of investors who set the previous managers to manage. These are referred to as management buy-out (MBO) and management buy-in (MBI) respectively.
12 Pages(3000 words)Essay
The hedge fund and private equity capital raising environment in EU
Originally they bought undervalued securities and sold what they believe to be undervalued securities short. Currently, hedge funds take positions in hedge funds as well as other complex derivatives. Madura (2006) indicates that hedge funds sell shares to the wealthy individuals and financial institutions and use the proceeds to invest in securities.
20 Pages(5000 words)Essay
Conclusion on Private Equity
Every year, new companies are joining the money markets and in to the private equity business; hence this is making the private equity markets become a lucrative source of income for several people and organizations. Private equity firms look for companies that are facing closure due to financial crisis and then they make buyouts to these companies.
4 Pages(1000 words)Essay
Outline the Arguments for and against Private Equity Investment
Companies can receive private equity from retailers and institutional investors and the funds serve a number of purposes such as acquiring new technologies, increasing working capital, strengthening the balance sheet and making acquisitions in terms of assets and other companies (Gilligan and Wright, 2008, p.
6 Pages(1500 words)Essay
Private Equity Funds
Private Equity Funds. Private Equity is the source of capital that is raised outside the public equity market in order to make investment in any asset or organization (Yong, 2012). The funds raised from the private equity market are generally sourced from those investors who are known as ‘limited partners’ which are then assigned to the respective investments with the help of the fund managers (also called ‘general partners’).
6 Pages(1500 words)Essay
Private Equity and Venture Capital Journal Review
In most cases data related with the financial performance of firms operating within a specific market have been used. Current study focuses on the examination and the
14 Pages(3500 words)Essay
Are private equity buyouts in the best interest of a company (2.3)
Many managers feel that companies are run better privately. However it may be difficult to convince shareholders of the benefits of the strategy,
5 Pages(1250 words)Essay
Economic opinion
The question is how does that affect employees in those companies? The article points out to a book by two economists with the title “private equity at work. This
3 Pages(750 words)Essay
Private equity & Venture capital
Proceeds are shared approximately equally between the entrepreneur and the venture capitalist; the entrepreneur makes $1.75 million and VC loses $1.25 million. The venture capital fund’s payoff will be $1.75 million. c) The venture capital fund’s
3 Pages(750 words)Essay
Let us find you another Essay on topic Private Equity for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us