Private equity has been growing since the 1970’s, is that trend set to continue?
Ask Someone In The Know
The private equity marketplace has been in growth almost constantly since the 1970’s. Even in the current challenging economic climate, as well as in previous recessions such as in the early 1990’s in the United Kingdom, the popularity of private equity has continued to grow.
There are many reasons for this trend, however in terms of the current economic climate it can be directly linked to the reluctance of banks to lend individuals and businesses money. If you are a private equity advisor, the banks shutting up shop and refusing to do business with basically anyone must be a great sign, your diary will be full!
Why Private Equity?
Many individuals will continue to place their capital into private equity for various reasons. One reason which is not often explored is that of the aging population. As the mass media tells us more vociferously that things like pensions and healthcare are unsustainable, and governments tell us we have to work longer, private equity is becoming a more attractive option on many fronts. For an individual with a private pension fund in their 40’s, placing a substantial sum of money into an attractive investment can reap generous rewards. From a personal point of view, it is also likely to allow them to retire at a much more favourable age, rather than potentially working into their seventies or indeed until they die.
Private equity advisors are a fantastic source of information in terms of choosing a private equity fund wisely. These individuals have a great deal of experience and knowledge of the private equity market, and can ably demonstrate how a business can continue to thrive and flourish even during a recession. One key thought to keep in mind is that the most attractive investments may well be the ones that are new start-ups, or struggling at the moment. A private equity advisor will point you down the right path, remember than an investment is likely to last between three and seven years, perhaps longer, so in that timeframe a business can make significant strides forward.
Whenever considering placing capital into a private equity fund, ensure you consider the risk/reward aspect of any transaction. Many people forget that investments can go both ways and end up unwittingly losing a great deal of money.
There is no doubt that 2013 will be another growth year for recruitment into private equity, and indeed this growth will continue far into the future.
This guest blog post has been provided by Robert Rayford, as a content writer in the finance industry for Dealmarket. Robert has been a private equity advisor for many different companies.