Private Equity

Free CFA Level III: Private Markets lesson in Private Equity. 25 min read, ~3,761 words.

Venture capital funds pre-revenue companies with negative cash flow. Returns follow a power law where 1-2 home runs in a 25-investment portfolio drive the fund. Growth equity funds profitable, scaling businesses pre-profitability via minority stakes, limited leverage, and no operational control. Buyouts acquire mature cash-generative companies using 50-70% debt. Returns...