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Outline the Arguments for and against Private Equity Investment - Essay Example
Author : cbrown
Finance & Accounting
Pages 6 (1506 words)
Topic: Outline the Arguments for and Against Private Equity Investment Name Professor Institution Course Date Private Equity Private equity is a kind of investment whereby investors make direct investments into private companies or completely buyouts of publicly listed companies resulting in their delisting from the stock exchange…
120). In most cases, private equity is driven by the opportunity to earn high returns from a company. Private equity funds mainly come from the private market but private equity firms can invest the funds in both the public and private companies. It is important to note that when the investment is made in a public company, the company becomes private because private investors take control of the company they have invested their money. The market for private equity has evolved significantly in the past one or two decades. This is driven by the fact that a majority of investors have identified good opportunities that reward very high returns in the private equity market. Research studies reckon that the number of expensive buyouts has been increasing every year with investors increasing the size of their investments in the private equity market. The growth of the private equity market has led to a number of concerns regarding its sustainability in the long run. However, one debate that has continued to dominate the financial market is whether private equity is a desirable investment or not. This paper sets to discuss the pros and cons associated with private equity in terms of improving company performance and benefiting the economy. ...