3: How Private Equity Firms Work

In this illuminating episode of M&A University, industry expert Jim Evanger demystifies private equity, providing entrepreneurs with an insider’s guide to how PE firms operate. Learn about the intricate world of private equity investments, from fund structures and valuation methods to transaction strategies and what makes a business attractive to potential buyers. Jim breaks down complex concepts like investment funnels, rollover equity, and the critical factors PE firms consider when evaluating acquisition targets. Whether you’re a business owner contemplating a future sale or simply curious about private equity, this episode offers invaluable insights into one of the most dynamic sectors of the business world.

Additional Information

• Topics Covered
  • Understanding Private Equity vs. Public Equity [0:02]
  • Structuring Private Equity Firms [1:59]
  • Fund Operations and Lifespan [5:19]
  • Importance of Professionalism and Due Diligence [7:50]
  • Co-Investment and Fee Structures [10:21]
  • Differences Between Private Equity and Venture Capital [14:41]
  • Focus and Specialization in Private Equity [18:07]
  • Types of Investments and Recapitalization [19:45]
  • The Investment Funnel and Due Diligence [23:26]
  • Valuation Methods and Transaction Structures [33:06]
  • Support and Expertise from Private Equity Firms [1:01:53]
  • Final Advice for Sellers [1:04:01]
• Helpful Resources
  • M&A Talk Episode: The Private Equity Toolkit – How PE Firms Grow Businesses
  • M&A Talk Episode: Understanding Private Equity – A Primer for Sellers