Private Equity Fund

A fund that buys majority stakes in companies and/or entire business units to restructure its capital, management and organization. They are independent funds that range in size from $50 million to over $10 billion.  Private equity funds flourish at all size ranges within the private capital market.  They have a winning formula that increases the value of companies, through addition of resources, implementation of better management and systems and acceleration of external growth.   Private equity funds are capitalized by limited partners consisting of high-net-worth individuals, asset managers, pension funds and endowments.   Private equity access has been democratized to allow individual investor participation through mutual funds. Returns on private equity funds vary greatly but range from 15% to 30% per annum on average, depending on the specific strategy and vintage.   Returns are related to the cyclicality of pricing levels for acquisitions.  At high water marks in the industry, private equity investors pay more for a company. This leads to lower returns than when private equity funds invest at cyclically low water points.  Private equity funds use a variety of skills to find good companies to acquire.  They use extensive outbound market including direct calling and emailing to generate leads.  They invest in industry level marketing to generate brand awareness in the market.  They bring successful industry veterans into their companies to build credibility and access potential acquisitions. Private equity funds have created highly efficient back-office systems and processes that they seek to apply to all their companies.   These systems are built with skilled, low-cost resources and high levels of technology automation.