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Private equity is shares issued by a private company and purchased by investors. A private equity deal is done because the issuer is still in the early stages of developing its business. Investing in a company at this stage is filled with risk but if the private company succeeds and goes public, the pay off could be several times over the initial investment. Funds for a private placement usually comes from wealthy individuals, investment firms, pension plans and endowment funds. To generate returns from a private equity investment, you need to pick
the right companies. These companies tend to have growing sales, a strong
commitment to constantly improving operations and a competitive edge.
These corporations have a better chance of surviving and prospering. |
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