Ancient redbrick universities such as Oxford have long conjured up images of intellectual supremacy and academic achievement, but increasingly they are also business-focused organisations with a clear stake in the private equity world. It now runs its own private equity courses, proving just how ubiquitous the needs of business are in today’s modern world. It’s a topic that covers leveraged buyouts, corporate turnarounds, growth capital and venture capital.
Some would also see it as capitalism at its most extreme, and it’s fair to say that private equity doesn’t have the most positive image. In the British press, it is often used as shorthand for corporate greed.
Leveraged Buyouts and More
The most typical or ‘pure’ type of private equity transaction is a leveraged buyout, as a sizeable proportion of public corporations are under-leveraged and have a great deal of capital to play with, especially in the current context of historically low interest rates. Private equity investors working within frameworks are keen to show the colour of their money to investors. For more information and to use a specialist in this matter an Equity Release Gloucestershire company could help with this at links like https://www.palmermortgages.co.uk/financial-services/equity-release-gloucestershire/
Organisations will use private equity schemes to finance a corporate acquisition in a leveraged buyout, ensuring predictable and steady cash flows, pending a corporate restructure and an onward sale for profit.
A Growing Asset Class
This type of asset class shows attractive headline returns, primarily because of accounting methods that use the IRR method to determine returns and fees. This is because of the nature of private equity, which flips funds and deals and never fully invests as it would in an ETF situation, for example.
It looks as though private equity is only set to grow. The Yale University endowment fund revealed venture capital returns of over 92pc in twenty years using this IRR method. The calculation would drop to 32pc if a time-weighted method was used.
The fact is that private equity makes returns for its investors, and the sector is growing and yet to fully mature. It is also a highly favoured asset glass in emerging markets and, fascinatingly, the career area is now the first choice of MBAs graduating from Oxford. Those keen to benefit will therefore be wise to look at investment via endowments and pension funds or employment in the field.