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The first way is to raise money from limited partners. Examples of limited partners include pension, retirement funds, endowments, as well as insurance companies. By raising money from external financial institutions, they are able to use the money to invest in companies.
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Another way of making money for private equity investors is to help improve the operations of the companies they are investing in. As a private equity investor, you are often given a seat as part of a board of investors. According to Tyler Tysdal, you can make suggestions, provide support, or even introduce changes that benefit the company from this position.
Lastly, private equity investors can make money by selling their portfolio at a profit. When they find a buyer who is interested in their current portfolio, they can outright sell them their share for a price.
Tyler Tysdal is the Managing Partner of Platte Management, a single-family office with active investment strategies in private equity and real estate. To know more about Mr. Tysdal, visit this website.