What do you understand by Private Equity?
What is the difference b/w PE and Venture Capital?
Answer Posted / sunny v
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. Many times investments are short in nature.
Technically speaking there is no substantial difference
between VC & PE investments. PE is a asset class which
includes VC, hedge funds, buyouts etc. VC investments are
generally in the startup companies with the innovative idea
of doing business. There could be a strong growth story
ahead but the same time high risk proportionally. Eg- The
VC investor exited their investments in websites during the
online boom before 2000. PE invest in the companies with
the consistent record of revenue and in later stage or the
companies with the strong financial base.
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