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How To Invest In Private Equity

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GreenReeper   Friday, 01/12/18 07:56:04 AM
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How To Invest In Private Equity
Private equity is capital made available to private companies or investors. The funds raised might be used to develop new products and technologies, expand working capital, make acquisitions or strengthen a companys balance sheet.

Unless you are willing to put up $250,000 or more, your choices in investing in the high-stakes world of private equity are very limited. In this article, well show you why and where you can invest in the private equity game.

SEE: Life-Cycle Funds: Can It Get Any Simpler?, Advantages Of Mutual Funds and The Dangers of Over-Diversification.)

Why Invest in Private Equity?
As you can see from the chart below, private equity is on the upswing, in spite of 2008s crisis:
U.S. Venture Capital Investment By Year
Year Number of Deals Total Investment (USD Mil)
2002 3,183 20,849.83
2003 3,004 18,613.83
2004 3,178 22,355.27
2005 3,262 22,945.71
2006 3,827 26,594.17
2007 4,124 30,826.31
2008 4,111 30,545.51
2009 3,065 19,745.81
2010 3,526 23,253.31
2011 3,673 28,425.08
Source: http://www.nvca.org/ffax.html


Institutional investors and wealthy individuals are often attracted to private-equity investments. This includes large university endowments, pension plans and family offices. Their money goes into pools that represent a source of funding for early-stage, high-risk ventures and plays a major role in the economy.

Often, the money will go into new companies believed to have significant growth possibilities in industries such as: telecommunications, software, hardware, healthcare and biotechnology. Private-equity firms try to add value to the companies they buy, with the goal of making them even more profitable. For example, they might bring in a new management team, add complementary companies, aggressively cut costs and then sell for big profits.

You probably recognize some of the companies below, which received private-equity funding over the years:
• A


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