What are some of the big issues facing the Private Equity industry?

Answer 1

Private equity is a subset of the funds management industry. Private equity firms draw down funds from their investors and use those funds to buy portfolio companies. The private equity firms charge investors a small % of funds under management but hope to make most of their money when portfolio companies are sold, splitting gains on sale with their investors.

The big threat for the sector is consolidation amongst private equity firms who can't sell portfolio companies at a profit and attract new investors (who pay fees) in. Please see http://financial-training-company.blogspot.com/2009/06/article-from-financial-training-company.html for more information. Although industry is facing outrageously difficult times but there are always opportunities for someone! Opportunities in the sector are there for:

- Private equity firms that do have cash to invest (now should be a good time to buy assets);

- Specialist private equity firms that invest in stressed businesses;

- Specialist investors in distressed debt. They have the opportunity to buy debt at a low face value and then sell on at a profit later;

- Specialist investors who purchase private equity companies' portfolios wholesale;

- Advisors who can help private equity firms refinance debt as well as crunch their businesses or portfolios together to deliver savings. Financial training company www.financialtrainingassociates.co.uk runs training courses in topics such as financial modellng in excel, valuation, corporate finance and private equity.