What is Private Equity?
Private equity, often referred to as “PE”, is a vehicle for an individual to invest directly into a private company. In some ways, PE investing is similar to purchasing shares of stock online or through your broker. In both cases, investors purchase and hold an equity interest in a company. PE differs from publicly traded securities in that (a) it cannot be purchased via a public stock exchange, and (b) it is less "liquid" because it cannot be sold or exchanged whenever the investor desires.
How do you sell a PE Investment?
Investors in PE are typically invested in the company until some established "exit" set by the company's directors, such as the sale of the company to a larger company, whereupon all investors would sell their interests at the same time as the founders. For this reason, in most "investor pitches", private companies share the anticipated hold time and exit strategy with prospective investors to make sure there is alignment. Because private companies often communicate directly with their investors, PE investors are typically much more in tune with the business strategy and accomplishments of the companies they invest in. So when a private company can generate stronger returns on an annualized basis than most other investment options, hold time isn't much of an issue.
Private equity investments, on average, generate higher returns than publicly-traded stocks. For this reason, PE is nearly always a component of the world's wealthiest investment portfolios.
Is Private Equity Only for the Super Rich?
PE is often known as an investment option accessible only to the ultra-rich, who allocate, on average, about 50% of their total investment portfolio to private equity! [3] So if you have heard the saying "the rich are getting richer", you may be right - they are, on average, earning better returns on their investments than most other investors.
But private equity isn't just for the super rich. In fact, 1 in 10 US households qualify to invest in private equity. [2] Because private investments cannot be made through a traditional broker, these opportunities are typically much harder for individual investors to access.
FDLD specializes in bringing private investment opportunities to individual investors. We have a down-to-earth approach and love introducing investors to their options in private equity.
Contact Us: InvestorRelations@FDLDholdings.com