Private Equity Investing - The Boom Is Over
Private Equity (PE) investing has grown dramatically over the past 5 years, and the private equity funds have produced excellent returns for investors. Private Equity funds have become very popular and trendy “alternative investments” that many large investors (high net worth families and institutional investors) have felt like that had to be involved with. Private Equity funds try to acquire companies or businesses cheaply. They use lots of tax-deductible debt to leverage their returns, cut costs to try to improve the short and long-term profitability, and sell assets to take capital out. Sometimes they pay themselves a dividend out of company owned assets, and they eventually (2-5 years later) sell out to another buyer or take the company public at a higher valuation.