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Private Equity (PE) is a category of capital investments in private companies, i.e. companies not listed on capital markets. In this context, private equity means the private investor´s share in a company with the net debt taken into account.
PE funds invest the capital of institutional and creditworthy private investors in target companies with the expectation that this stake will be worth more at the end of a specified period than the amount of the original investment. Taking an opportunistic approach to transactions, PE companies view target companies as an investment opportunity with a defined time horizon, risk profile and desired rate of return. They focus on looking for companies with growth potential in various sectors, with the goal of the fastest possible revenue growth, cost optimization and/or industry consolidation. The primary objective is to effectively manage company´s cash flow and maximize the value of the investment.