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Private Equity investments in profitable small and medium sized businesses

What is Private Equity?

Private Equity is the process of investing in unquoted companies. Within this report, we focus on the areas of ‘Growth Capital’ and ‘Buyouts’ in established profitable businesses.

Why invest in Private Equity?

The benefits of investing in private over quoted equity are

(1) Private Equity managers typically seek to exert a significant influence over the invested business.

(2) Hence, they can aid and develop the business from the ‘inside’.

(3) Private Equity managers can employ debt (leverage) to improve overall returns; in the case of Private Equity funds, this leverage is ring fenced in the individual investments reducing downside risk.

(4) Private Equity has delivered significantly higher returns than quoted equities over the short and longer term.

(5) Given the medium-long term nature of Private Equity investing, investors are often able to stagger their payments.