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(2) isn’t private equity. Private equity simply means funds investing in private, not public, firms. In fact, if you look at other comments people post about ho
by rhaway84773 3y ago
(2) isn’t private equity. Private equity simply means funds investing in private, not public, firms. In fact, if you look at other comments people post about how companies are terrible because they have to please shareholders, private equity actually solves that problem.
What you’re talking about is LBOs (leveraged buyouts) which are a certain kind of private equity investment.
- Aeolun 3y ago> private equity actually solves that problem Private equity firms still try to please their shareholders, they’re just not beholden to a public stock price.
- 1_1xdev1 3y ago(2) is how private equity tends to operate. You’re correct about the definition. And, no, lbos are the buyer borrowing a lot to buy another company, while using the assets of the acquisition as collateral. The debt is still in the buyer’s name AFAIK (may be wrong)
- xg15 3y ago> private equity actually solves that problem. How does it solve that problem?
- snake_doc 3y agoPrivate equity owners often have less short term incentives because their funds are usually 10 years long. On average, an investment from purchase to exit may take ~5 years. Whereas a public company with large institutional owners will have to respond to market feedback in real-time, i.e they are more likely to follow the herd if institutions (pension funds) demand a shift in industry trends (ie ESG). Whereas, private equity have no such concerns.