Undergraduated

My previous post provided 5 helpful links that may help answer the question What is Venture Capital? This post looks at Private Equity, a very close relative of Venture Capital. Here are 5 helpful links to get you started:

1. Wikipedia

Once again, Wikipedia provides a solid foundation for understanding Private Equity. For an overall view of the basics and history of Private Equity, this is the place to start.

From their site:
“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 these investments are short term in nature.”

2. WikiInvest

This article is a bit more sophisticated than Wikipedia’s. It is written from a collection of financial publications. It provides charts and poses questions with answers.

From their site:
“Private equity is essentially a way to invest in some asset that isn’t publicly traded, or to invest in a publicly traded asset with the intention of taking it private. Unlike stocks, mutual funds, and bonds, private equity funds usually invest in more illiquid assets, i.e. companies. By purchasing companies, the firms gain access to those companies’ assets and revenue sources, which can lead to very high returns on investments”

3. BNET

An excellent post. I’d recommend reading the previous 2 articles first if the term “Private Equity” is completely new to you. Otherwise, this article would be a great place to start. This article contains a list of terms that will help you understand Private Equity better as well.

From their site:
“The term “private equity” encompasses a range of techniques used to finance commercial ventures in ways that do not involve the use of publicly tradable assets such as corporate stock or bonds. Typical forms of private equity include venture capital, growth and mezzanine capital, angel investing, and private equity funds.”

4. Fortune

Fortune provides a look at current (the article was written in 2006 but it’s still helpful) trends in Private Equity. It does a great job comparing Private to Public and explaining the benefits and disadvantages of Private Equity.

From their site:
“The private equity boom is breathtaking. It’s not just making investors rich – the wave of deals is changing the mindset of corporate managers everywhere”

5. HSBC Private Bank

This article is extremely basic, and is not as insightful as the other articles mentioned above. However, this article does incorporate Venture Capital and includes helpful graphs on the life cycle of a company.

From their site:
“Private equity investments are an important source of capital for new and emerging firms, distressed firms, and both private and public firms in need of capital. One reason is that private investment avoids the cost associated with pursuing a public stock offering; another is that private equity securities are not regulated as stringently as are public securities.”

Related posts:

1. What is Venture Capital? 5 Helpful Links