Knowledge Center

How do PE firms make money? There are really just three main ways: fees, carried interest and dividend recaps. Let us explain.

Sovereign wealth funds represent around $8 trillion in assets under management. That’s more than the world’s hedge funds. That’s more than private equity. But how do they manage all that cash?

Our fourth installment of PitchBook’s M&A 101 series investigates due diligence and its role in preparing a company for a successful sales process.

For the first four installments of our M&A 101 series, PitchBook financial writer Adam Putz spoke with industry experts about different M&A transaction types, investment banking and due diligence.

Our third installment of PitchBook’s M&A 101 series investigates antitrust law at a moment when regulators worldwide are taking another look at competition in business.

For the second installment of our series, we talked to Meridian Capital VP Giovanna Burns about what makes I-banks unique and how they fit into M&A as a whole.

In the first part of our M&A 101 series, we talked to Andy Shawber and Laura Harper of Summit Law Group about what makes a merger distinct from other types of acquisitions.

The private in private equity refers to the fact that the companies bought and sold are not publicly traded. Increasingly, though, that definition is changing. We took a look at the PE firms that have decided to go public.

Venture investing is very risky. That’s why VCs are experts at building downside protections into their deals to limit their chances of losing money if an investment declines in value.

Emerging market countries may well represent the greatest opportunity for growth in the private equity industry over the coming years, and in fact, weve already seen PE investing in developing countries expand since the financial crisis.

Fundraising Venture capital (VC) investments are made through a fund that is created and managed by a VC investment firm, referred to in the industry as the general partner (GP).

As part of the PitchBook Knowledge Center, we have defined and explained some of the characteristics of growth deals in private equity.

In the larger scheme of private equity investing, growth equity generally takes a back seat to buyouts, particularly larger ones, which receive most of the press and generally set the tone for how the industry is covered in the news media.

Casual observers often lump private equity (PE) in with the rest of Wall Street, particularly hedge funds and investment banks. In reality, the PE industry differs significantly from the rest of Wall Street, and from the rest of the economy in general. No one really does what PE does.

When private equity was coming of age, the use of leverage and financial engineering was often more than enough to drive returns.

Secondary buyouts occur when private equity (PE) firms sell control of a portfolio company to another PE firm. The transaction seems simple at a glance, but there are several implications tied to this particular kind of deal, both on the buy side and sell side.

Before exiting a portfolio company, many private equity firms opt to generate pre-sale returns on their investments through transactions known as dividend recapitalizations. In short, companies that undergo dividend recaps incur additional debt on their balance sheets in order to pay one-time dividends to their shareholders, chiefly their PE sponsors and often their management teams.

Numerous news sourceshave reported onCalPERS recently announced plans to reduce the number of its private equity (PE) manager relationships by about two-thirds from its current 389 to about 120 in the future. Here we see how this could affect the PE industry.