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Private equity is money invested in companies that are not publicly traded on a stock exchange or invested as part of buyouts of publicly traded companies in order to make them private companies. Among the most common investment strategies in private equity include leveraged buyouts (LBO), venture capital, growth capital, distressed investments and mezzanine capital. Leveraged buyouts involve a financial sponsor agreeing to an acquisition without itself committing all the capital required for the acquisition. To do this, the financial sponsor will raise acquisition debt which ultimately looks to the cash flows of the acquisition target to make interest and principal payments. Acquisition debt in an LBO is often non-recourse to the financial sponsor and has no claim on other investment managed by the financial sponsor. Therefore, an LBO transaction's financial structure is particularly attractive to a fund's limited partners, allowing them the benefits of leverage but greatly limiting the degree of recourse of that leverage. This kind of financing structure leverage benefits an LBO's financial sponsor in two ways: (1) the investor itself only needs to provide a fraction of the capital for the acquisition, and (2) the returns to the investor will be enhanced (as long as the return on assets exceeds the cost of the debt). As a percentage of the purchase price for a leverage buyout target, the amount of debt used to finance a transaction varies according to the financial condition and history of the acquisition target, market conditions, the willingness of lenders to extend credit (both to the LBO's financial sponsors and the company to be acquired) as well as the interest costs and the ability of the company to cover those costs. Historically the debt portion of an LBO will range from 60%-90% of the purchase price, although during certain periods the debt ratio can be higher or lower than the historical averages. Between 2000-2005 debt averaged between 59.4% and 67.9% of total purchase price for LBOs in the United States. From Wikipedia under the
GNU Free Documentation License What is the definition of Hedge Funds and Private Equity Investments? Q. What is the premise of investing in- 1. Hedge Funds. 2. Private Equity Investments. Asked by batman253 - Tue Feb 6 18:16:32 2007 - - 1 Answers - 0 Comments A. 1 - Hedge Funds - investment companies that uses techniques, such as borrowing money and selling short, in an effort to make extraordinary capital gains. 2 - Private Equity Investments - Private equity is a broad term that refers to any type of equity investment in an asset in which the equity is not freely tradable on a public stock market. Such as shares in Private Companies. Hedge funds may also do private Equity Deals but they do all sorts of other investments as well: Stocks, options, etc. Answered by random_market_investor - Sat Feb 10 00:10:58 2007 Do you have to start Private Equity Firms in New York, NY? Q. You don't have to start a Private Equity Firm in New York, NY or California do you...also would it be good to start one in Miami, FL? Asked by nygiantsfan - Tue Dec 23 23:43:32 2008 - - 1 Answers - 0 Comments A. You can start a private equity firm in any city or state. The reason most of them are in New York has more to do with traditions going back to an era before electronic communications when it was almost a necessity to be located in the same city as the major stock exchanges so that a firm could react quickly to market changes. With modern communications it is no longer necessary to be located in the same geographic area as the stock exchanges since trades can be initiated from anyplace on the planet. Just make sure that the place you are operating from has reliable electronic communications 24/7. Hope this helps Jerry-the-bookkeeper Answered by jerry-the-bookkeeper - Wed Dec 24 00:30:48 2008 What is a private equity firm?Do people who work in them get paid a lot?
Q. Also, is it a risky job? Asked by Me - Sat May 23 02:39:35 2009 - - 1 Answers - 0 Comments A. i aint got a clue but when you find out let me know. lol Answered by unknown - Sat May 23 02:47:58 2009 From Yahoo Answer Search: "Private equity"  news.google.com PR Urgent According to Jack Mullen, Senior Partner at SSA, the engagement showcased the firm's ability to execute value-added services to the Private Equity community ... and more » news.google.com BusinessWeek Carlyle Group, the world's second-largest private equity firm, plans to invest $1.2 billion in Brazil in five years, said a senior associate, ... Brazilian buy-out funds sitting on $9bn in dry powder AltAssets all 6 news articles » news.google.com Economic Times new delhi: US-based private equity firm New Silk Route Partners (NSR) has picked up a little over 30% stake in Chandigarh-based listed pharma company ... and more » From Google News Search: "Private equity"  motorauthority.com 321px x 510px | 34.90kB [source page] From Yahoo Image Search: "Private equity"  insiderit.com unknown Wed, 03 Mar 2010 01:08:00 GM Elliott, which has more than $16 billion in assets under management including an interest in specialty discount retailer ShopKo Stores Inc., wants to take Novell . private. so that it can focus on its software development activities.  blog.smartincubator.com elgintan ue, 02 Mar 2010 03:31:48 GM U.S. . private. -. equity. -led transactions in 2009 were valued at 7.7 times earnings before interest, tax, depreciation and amortization, the usual benchmark for valuation in the . private. - . equity. world, according to S&P. ...  distressedcoalition.com admin ue, 02 Mar 2010 20:59:16 GM Carlyle Group, one of the world's largest . private equity. firms, will set up a yuan-denominated fund with Fosun Group, a Chinese privately owned company whose. Read the original post: Carlyle Group sets up second yuan-based private ... From Google Blog Search: "Private equity" |
