4 Reasons Why Private Equity Firms Offer the Best of Capitalism
A recent story by TheStreet explains why private equity firms offer the best of capitalism, noting that “Private equity groups increase shareholder value, add liquidity, offer greater resources and allow for more to invest in a wider range of assets.”
The four main reasons why PE firms are the best capitalism has to offer, according to TheStreet:
1. Private equity enhances shareholder value – When a private equity firm buys a company, it offers a higher share price.
2. Private equity deals add to the health of the financial markets – Private equity transactions improve the efficiency, and thus the health, of markets by injecting liquidity…[and] capital to entities of all sizes and types, too.
3. Private equity allows companies to better compete – When a private equity group acquires a business, that firm gains access to high-quality resources for managerial, financial, and legal matters. That naturally leads to companies that are managed much more efficiently with access to much more capital and other vital business resources.
4. Private equity opens opportunities for investors – For many private equity transactions, taking the company public is the exit strategy. That offers a greater selection to investors, which leads to more diversity and enhanced risk management, two of the most important considerations for any portfolio.
To learn more about who benefits from the significant returns generated by private equity investment, check out our white board video here.
