How Do Private Equity Funds Work?
Private equity funds may sound intimidating, but these funds are actually rather simple. Private equity funds are established as a limited partnership by a private equity firm. The firm reaches out to larger investors as a way to seek investments in the funds. Once these investors make investments, the limited partners’ capital is locked away for a certain amount of time before the funds are liquidated and the principle is returned to its shareholders.
Private equity firms typically work with large investors, such as extremely wealthy individuals, charities, insurance companies, university endowments, and union pension plans. These investors are limited partners in the established fund, while the private equity firm that is managing the fund is the general partner who can make all investment decisions.
Private equity funds are beneficial because they offer leverage, short time frames, and profits. Private equity firms receive 100 percent ownership of public markets, and therefore receive 100 percent of the profits from these companies. Through private equity firms, profits are maximized. Another perk to private equity funds is the ability to exit sooner than other options. Private equity funds are specifically designed to exist for less than ten years. When the fund ends and the exit period begins, private equity positions are typically sold to competing firms or listed to private companies.
Now that you have a greater understanding of private equity funds, consider reaching out to AHL Hard Money Network. Our business works with individuals and companies to assist in proper funding and loan options. To learn more about the services we provide here at AHL Hard Money Network, reach out to us via email at AHLhomeequitynetwork@gmail.com. You can also get in contact with us by calling or texting our company at 813-368-9919. We hope to hear from you soon!