A private equity firm acquires the ownership of a business which is not listed on the stock exchange and then works to turn the company around or expand it. Private equity firms typically raise funds through an investment fund that has an established structure and distribution plan and then invest that money into their target companies. Limited Partners are the investors in the fund, and the private equity firm is the General Partner, responsible for purchasing or selling the fund and overseeing the funds.

PE firms can be criticized for being ruthless and pursuing profits at any cost, but they possess extensive management experience that allows them to increase value of portfolio companies by improving the operations and supporting functions. For instance, they could walk a new executive staff through the best practices for financial and corporate strategy and help implement more efficient accounting, procurement, and IT systems to drive down costs. They can also boost revenue and find operational efficiencies which can help increase the value of their assets.

Unlike stock investments that can be converted in a matter of minutes to cash and cash, private equity funds generally require a huge sum of money and may take years before they are able sell a company they want to purchase at profit. Because of this, the market is extremely inliquid.

Working for a private equity firm typically requires prior experience in finance or banking. Associate positions at entry level focus on due diligence and financing, whereas junior and senior associates concentrate on the relationship between the firm and its clients. In recent years, the pay for these roles has increased.

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