What does a PE investor do?

PE investors may invest in a company that’s stagnant or distressed, but still shows signs for growth potential. When a PE firm sells one of its portfolio companies to another company or investor, the firm usually makes a profit and distributes returns to LPs that invested in its fund. Some PE-backed companies may also go public.

What is a PE fund?

A PE fund is a pool of capital raised by PE investors and sourced from LPs. Both private equity funds and hedge funds are restricted to accredited investors. However, the biggest differences between PE funds and hedge funds are fund structure and investment targets.

Should you invest in a PE firm?

Ambitious investors with means can invest with a PE firm directly, through participation in a larger fund or by investing in the stock of major funds. PE investments don’t always pay off, but when they’re successful they can generate large returns much faster than publicly traded stocks.