Chapter 9

Private Equity and Hedge Funds

Abstract

Private equity (PE) is a type of equity investment in private companies that are not listed on the stock exchanges. The primary aim of investments by a PE firm is to get involved in the business, increase the value of the business, and sell shares in the business to get the desired payoff. PE strategies involve leveraged buyouts, venture capital, growth capital, distressed investments, and mezzanine capital. The different types of PE funds are categorized as leverage buyout funds, venture capital funds, growth equity funds, and special situation funds. Venture capital is a type of PE investment for promoting new technology, new marketing concepts, and new products. A hedge fund is an alternative ...

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