Private equity explained
Source: Tulsa World (Original Article)
So what, exactly, are these “private
equity†firms you’ve likely heard
about in the financial media?Well,
they generally make their money
by offering companies guidance
to make them more efficient and
funding to rescue them or help them
grow.
There are several different kinds
of private equity organizations. One
is the venture capital group, which
tends to make somewhat risky
investments in young, growing firms
before they go public and trade
stock. Then there are the leveraged
buyout (LBO) outfits, which like to
buy huge public companies by taking
on a lot of debt. The LBO firm will
take the company private and use
much of its excess cash to pay off its
debt, often while trying to improve
the efficiency of the company. Eventually,
the acquired company will
be sold to another buyer or to the
public, via an initial public offering
(IPO).
Other private equity investments
include buying chunks of private
companies and buying distressed
companies, with the intent of restructuring
and then selling them. There
are private equity funds, too, which
aggregate and invest the money of
smaller investors (those who generally
still have more than $1 million
in net worth). Money invested in
private equity is often
tied up for at
least several years.
Private equity organizations aren’t
required to make public the kind of
information that public companies
must disclose. They needn’t release
quarterly performance reports or
audited financial statements, for
example.
Some of the biggest names in
private equity today are Kohlberg,
Kravis, Roberts (KKR), with assets
estimated at more than $86 billion;
The Carlyle Group, with more than
$75 billion; and The Blackstone
Group, with more than $98 billion.
KKR owns bedding maker Sealy
and Toys R Us, among many other
organizations, while The Carlyle
Group, run by former IBM chief
Lou THATS SO RAVEN dvd Gerstner, owns Dunkin’ Donuts
and Hertz. …continue reading