Analysis of IRR The IRR, a cash-flow-weighted rate of return, is considered the most suitable measure of private equity performance by the Global Investment Performance Standards (GIPS), Venture Capital and Private Equity Valuation Principles, and other venture capital and private…

Private Equity Fund Structures Limited Partnerships This is the most common form of ownership structure for private equity funds. In this scenario, the limited partners (LPs) offer funding but do not actively manage the investments. The partners’ liability is typically…

Private equity fund investment is guided by restrictions driven by the high levels of risks experienced in private equity investment. Such an investment is generally subject to disclosure in the private equity fund prospectus. The risks may be categorized as:…

An investment exit option is a fundamental consideration for most investors in private equity firms. It helps them factor their assessment of the exit outcome into their analysis of target and expected internal rate of return. Initial Public Offering (IPO)…

A buyout occurs when a buyer acquires a controlling stake in the equity capital from a target company’s seller in a private equity transaction. Using borrowed funds to finance a significant portion of the acquisition price is a leveraged buyout….

Buyout and venture capital funds are the two critical private equity investments regarding the number of funds and invested amounts. Characteristics of Valuations of Venture Capital and Buyout Investments Firms financed through venture capital are typically less mature than buyout…

In most private equity firms, the businesses, their ownership, and control are concentrated in the same hands. Private equity firms can also increase control if any venture capital investee firm does not meet specified targets. The following clauses can be…

Generally, private equity firms are believed to have the ability to add substantial value to their portfolio firms compared to publicly governed companies. Thanks to this aspect of private equity firms, they form a critical component of the financial system….

 Advantages The most likely merits of investing in real estate through publicly traded real estate securities include: Higher Liquidity Publicly traded real estate securities offer investors much higher liquidity than physical real estate investments since they trade daily on…

 An example is better suited here to help candidates understand the concept. Example: Value of a REIT Share Tysons Limited, a real estate asset management company, is keen on diversifying its portfolio through an office lease REIT investment. The…