When a process is working, conventional wisdom suggests leaving it alone. If it isn’t broken, why fix it?
At our firm, though, we would rather devote extra energy to making a good process great. Instead of resting on our laurels, we have spent the last few years focusing on our private equity research, not because we are dissatisfied, but because we believe even our strengths can become stronger.
As an investor, then, what should you look for when considering a private equity investment? Many of the same things we do when considering it on a client’s behalf.
Private Equity 101: Due Diligence Basics
Private equity is, at its most basic, investments that are not listed on a public exchange. However, I use the term here a bit more specifically. When I talk about private equity, I do not mean lending money to an entrepreneurial friend or providing other forms of venture capital. The investments I discuss are used to conduct leveraged buyouts, where large amounts of debt are issued to finance takeovers of companies. Importantly, I am discussing private equity funds, not direct investments in privately held companies.
Before researching any private equity investment, it is crucial to understand the general risks involved with this