PRIVATE EQUITY/VENTURE CAPITAL

Private Equity/Venture Capital

In finance, private equity is an asset class consisting of equity securities and debt in operating companies that are not publically traded on a stock exchange.

A private equity investment will generally be made by a private equity firm, a venture capital firm or an angel investor. Each of these categories of investor has its own set of goals, preferences and investment strategies; however, all provide working capital to a target company to nurture expansion, new-product development, or restructuring of the company’s operations, management, or owners.

Among the most common investment strategies in private equity are: leveraged buyouts, venture capital, growth capital, distress investments and mezzanine capital. In a typical leveraged buyout transaction, a private equity firm buys majority control of an existing or mature firm. This is distinct from a venture capital or growth capital investment, in which the investors (typically venture capital firms or angel investors) invest in young, growing or emerging companies and rarely obtain majority control.