Private Equity is defined broadly as private transactions in public or private companies. Typically Private Equity’s two main objectives are to provide an opportunity for high net worth clients to diversify their equity holdings and to provide returns in excess of the public markets’ returns. Private Equity funds often take an active management role within the companies where they’ve invested with the goal of creating additional value prior to selling the company. Unlike many investments, private equity investments do not offer liquidity. In fact, investors should expect their funds to be committed for ten years or more.
There are four basic categories of private equity, which are segmented largely by stage of development of the target company and focus on a particular sector or strategy.
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