Nuances of a Private Equity Strategy

Nuances of a Private Equity Strategy Private equity and various forms of investment management have become the en vogue form of financing. Twenty years ago, it was investment banking, but now private equity has become the de facto, most elite form of financing—at least from a reputational and PR perspective. Private equity has gone through different phases of growth. A big part of their focus was saying, “You're a conglomerate, and you’re not able to extract the maximum value from this because you have multiple conflicting demands on your capital and management time. So, why don't we buy this from you? We’ll pay you a bigger premium than you would get if you managed this business by yourself. We believe that with the right kind of focus, we can create a lot of value, and we'll make a return so everyone's happy.” As private equity firms grew and started piling in funding from institutional shareholders, instead of just going after divisions of big companies, they started going after entire companies. But there are only so many big companies and divisions you can acquire in established Western markets. Then private equity firms started moving outside the US. In the latest shift,…