Private Equity for dummies – A case study

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An short example is worth more than a long lecture. Here is a real life example of what an investor can really expect from private equity, and why it does matter.

This, is a hot topic. Indeed was I recently contacted multiple times by clients who were “proposed” private equity investments by their private bankers.

They were all promised highly attractive returns ( “Internal Rate of Return” ) and were drawn to it. It was fun, sexy investing. They just wanted confirmation, validation, they were going to do it.

But still… they all noticed the same diffuse smoke in the air, forming a hazy screen of complex figures and arguments, and they could not find its source. Something was not right and they did not know what.

They all received the same advice from me :

Don’t. Just don’t.

I want to explain why. But I will try do it the less boring way I can, which is still far from being fun, I will use a real world example.

So here a real world case of a private equity fund. And here is why it is “not as good as it looks like”, and why anyone interested in finance should be aware of this.

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