The Routledge Companion to Management Buyouts

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HEDGE FUNDS AND PRIVATE EQUITY

Features, diversity, and regulations

Douglas Cumming and Geoffrey Wood

Introduction

Alternative investors have become much more prominent in the global financial ecosystem. Four of the most prominent categories include private equity (PE), hedge funds, sovereign wealth funds, and venture capital. Although none has escaped controversy, the former two have come under particular scrutiny for their possible effects on target firms. PE explicitly seeks to change how the firm is run in terms of scale and scope of operations, extent of assets, work and employment relations, and/or relative debt leverage; interventions form the basis of returns. While hedge funds may similarly promote new managerial strategies, they ...