Thursday, March 14, 2019

How do you earn through private equity investments?

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Different forms of investments yield profit in different ways. For example, trading currency yields money from the difference of currency bought at a lower price and selling the same currency when its price rises. The same also applies to commodities trading. However, some forms of investment are not well known to the general public. Private equity investment, for example, isn’t the first term that comes to mind when people think about investment. According to investment expert Tyler Tysdal, there are four major ways on how private equity investors make money.

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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When private equity investors close a deal, they usually get paid for finding the source, doing due diligence, as well as closing the deal. This is often an incentive given to these investors if they work as part of an investment firm.

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.