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"Allegedly when private equity funds, which have limited-lives of usually five to seven years, are liquidating, some sixty per cent of the companies invested in are sold to new private equity funds being raised by competitors."
Pulled this excerpt from the July issue. Curious where the 60% figure came from? I feel many transactions are actually to strategics and not other PE firms...
As I understand listed private equity firms raise capital by being listed on a stock exchange while a fully private firm raises capital through private placements. However, they both hold private portfolios of companies, in most cases, not listed on the exchanges. Generally, the later has a lock up period while the other does not. Being an accredited investor I could, if I wish, invested directly in private equity; however, to avoid the lock up period I chose the listed option version over the private version.
Here is what Investopedia has to say on the subject.
With this, one of the better known listed private equity companies (but, not really thought of as private equity) is Berkshire Hathaway as it holds a good number of companies that do not trade directly on the stock exchange. By being listed it has tighter reporting requirements than truly private equity firms do which is better for an investor from my perspective. Plus it can raise capital from a larger investor base.
I'm thinking more and more of the private equity firms over time will become listed.
Again, both types (listed & not listed) hold a private portfolio of mostly non listed companies.
Thanks again for your response. And, after reading what Investopedia wrote on the subject your answer "really" says a lot about you.
i think public listing used to be a conventional exit. not so in the last 10 years. you see UBER and other multi-billion dollar companies which have no issues raising multiple rounds of financings in private markets -- there are simply no reasons to do an IPO... So the referenced below 60% stats seems quite credible.
(one does need to be an accredited investor for some deals, or, even more restrictive - a qualified purchaser.) also, many private companies are just as overpriced now as are the public ones. the current tech correction has its desired effect on both, public and private markets, and might shake some private valuations.
don't forget there is also a private debt market. i am studying one offering currently ..
"Allegedly when private equity funds, which have limited-lives of usually five to seven years, are liquidating, some sixty per cent of the companies invested in are sold to new private equity funds being raised by competitors."
Pulled this excerpt from the July issue. Curious where the 60% figure came from? I feel many transactions are actually to strategics and not other PE firms...
Comments
Thank you for your response.
As I understand listed private equity firms raise capital by being listed on a stock exchange while a fully private firm raises capital through private placements. However, they both hold private portfolios of companies, in most cases, not listed on the exchanges. Generally, the later has a lock up period while the other does not. Being an accredited investor I could, if I wish, invested directly in private equity; however, to avoid the lock up period I chose the listed option version over the private version.
Here is what Investopedia has to say on the subject.
http://www.investopedia.com/articles/investing/030415/difference-between-private-and-public-equity.asp
With this, one of the better known listed private equity companies (but, not really thought of as private equity) is Berkshire Hathaway as it holds a good number of companies that do not trade directly on the stock exchange. By being listed it has tighter reporting requirements than truly private equity firms do which is better for an investor from my perspective. Plus it can raise capital from a larger investor base.
I'm thinking more and more of the private equity firms over time will become listed.
Again, both types (listed & not listed) hold a private portfolio of mostly non listed companies.
Thanks again for your response. And, after reading what Investopedia wrote on the subject your answer "really" says a lot about you.
aka, Old_Skeet
(one does need to be an accredited investor for some deals, or, even more restrictive - a qualified purchaser.) also, many private companies are just as overpriced now as are the public ones. the current tech correction has its desired effect on both, public and private markets, and might shake some private valuations.
don't forget there is also a private debt market. i am studying one offering currently ..