Financial Intermediaries Exist Purely Because of Information Asymmetries and...

clubby equity is usually medium to persistent-term finance provided in return for an equity stake in say-so high growth unquoted companies. These equity investments include securities that are non listed on a public exchange and are not easily accessible to most item-by-items [1]. There are usually take intable only to high net worth individuals, corporations, institutional clients etc. These investments range from initial keen in start-up enterprises to leveraged buyouts of fully grown-up corporations. Mostly backstage Equity notes are structured as closed- curiosity funds with a finite life span of 10 or 12 years, which may be extended with the consent of the majority of the shareholders (Gompers and Lerner, 1999). Although they are illiquid and by chance more essayy than publicly traded investments, when employed consistently as fraction of a larger balanced portfolio, they can tender higher returns than traditional public equity investments. According to Lerner et al. (2004) and Gompers and Lerner (2002) Private Equity funds are typically structured as limit liability partnerships in which a specialized Private Equity firm serves as the general partner (GP) and institutional investors or high-net-worth individuals provide the majority of capital as limited partners (LP).

The GP undertakes investments of various types (e.g. venture capital, bridge financing, expansion capital, leveraged buyouts), with the compact to liquidate all investments and return the proceeds to the investors by the end of the funds life. Summary of private equity characteristics: High risk asset class ? As private equity market is not transparent, as there is little publicly available information. So drop in private equity is riskier than investing in other publicly traded firms. The risks and illiquidity of investments are compensated for by a higher expected return. [2] Long-term time vista ? An engagement in private equity is usually long term investment with usual life span... If you want to get a full essay, order it on our website: Orderessay

Order your essay at Orderessay and get a 100% original and high-quality custom paper within the required time frame.