Quarterly Newsletter

Private Equity

Private Equity investing encompasses a broad spectrum of diverse investment opportunities.  The continuum of private equity investing is generally divided into three broad categories: venture capital, buyouts or leveraged buyouts (“LBOs”) and special situations.  Each category has its own subcategories with their respective dynamics.  In addition, managers within the same subcategory may pursue wide-ranging investment philosophies or strategies.

Investors are drawn to private equity investments for a number of reasons, including the potential to offer attractive rates of return, historical low correlation with the public equity markets and potential tax advantages associated with the long term nature of these investments.  When evaluating the merits of an investment, private equity managers are usually given fuller access to company information.  This type of information can prove quite valuable when determining a company’s valuation and whether to commit capital to an investment.

These investments also come with significant risks.  These risks include the loss of capital, illiquid nature of most private companies, irregular capital calls and uncertain cash distribution schedules.  Investors must have the ability to bear the risk of loss of their entire investment. 

“It only takes a handful of winners to make a lifetime of investing worthwhile.”

-Peter Lynch