Private Equity Demystified by John Gilligan, Mike Wright

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At the end of the 1980s, mirroring the US experience, a number of large buy-outs were completed that subsequently either failed or resulted in significant losses to the equity investors. 2bn buy-out of Gateway supermarkets. Buy-outs of captive funds: following the impact of the recession of the early 1990s, many of the captive funds were themselves bought out from their parent companies by their partners, virtually all rebranding themselves as private equity or buy-out firms and abandoning any pretension to venture capital activities.

The academic evidence (Appendix Table 5) suggests that there is a wide variation in the length of time any investment is held. There is no evidence that the industry systematically seeks to ‘flip’ investments in a short time period. Indeed the average holding period has been increasing over time. 4 How does a private equity fund differ from a quoted equity fund? 1). Some quoted funds are specifically designed as income funds that seek to pay to investors a running yield generated from dividend income from shares and interest on bonds.

Who are the participants in a private equity transaction? 37 Each of these necessary conditions is met in the UK. However, the number of alternative locations worldwide where they are also met is increasing due to the globalisation of both financial markets and professional service firms. The choice of the UK is therefore increasingly dependent on a complex inter-relation of other economic, legal and cultural factors, including: Economic environment: local costs and benefits and the overall economic infrastructure of the location are very important.