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About Private Equity

Article Index
About Private Equity
Venture Capital
Sources & PE Strategy
Laveraging off balance sheet
Constructing Portfolio
Practical Aspects of Investment
Portfolio Monitoring and Performance
All Pages
Private equity is often categorized as an "alternative investment", comprising a variety of investment techniques, strategies and asset classes that are complementary to the stock and bond portfolios traditionally used by investors. This chart shows the main components of the alternative investment space at a broad level.

Definition of private equity

Private equity investing may broadly be defined as "investing in securities through a negotiated process". The majority of private equity investments are in unquoted companies. Private equity investment is typically a transformational, value-added, active investment strategy. It calls for a specialized skill set which is a key due diligence area for investors' assessment of a manager. The processes of buyout and venture investing call for different application of these skills as they focus on different stages of the life cycle of a company.

Private equity investing is often divided into the categories described below. Each has its own subcategories and dynamics and whilst this is simplistic, it provides a useful basis for portfolio construction. In this article, private equity is the universe of all venture and buyout investing, whether such investments are made through funds, funds of funds or secondary investments.

Company Maturity