Private equity enables the growth and development of unlisted businesses. Private equity consists of funds making equity investments in non-listed companies. Private equity investors are active owners. Besides capital, the investors provide the companies with strategic and managerial support. Value creation in private equity is primarily based on achieving increased growth and operational efficiency.
Private equity investments are usually categorized based on life cycle phase of the
target company:
- Seed/early stage investments: Financing for development and commercialization of a business concept.
- Venture Capital: Minority/majority investments in early stage or expansion ventures.
- Growth Capital: Typically minority investments in companies with major growth potential.
- Buyout: Acquisition of a controlling interest in a company together with the operative management or an outside management group.
- Special situations: Investments in distressed companies or companies operating in an industry with major changes
