PE Leaders’ Strategies

Private equity (PE) firms generally define their investment strategies in a ‘private placement memorandum’ addressed to potential investors. The memorandum presents various features: size of the fund, types of proposed investments, deal flow, fees, life cycle of the investment portfolio, expected return(s), the average debt/equity leverage in targeted acquisitions, and other key characteristics. Some PE funds may seek to own controlling interests in companies, while others opt for spreading risks through minority stakes in a variety of unrelated industries. A PE firm may solicit, to begin with, potential investors sharing similar objectives from among its traditional core clients. The circle could be enlarged to encompass other potential investors, should sums required prove difficult to mobilize within the core group. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.