Part 1 - What Makes a Good Private Equity Investment?

What Makes a Good Private Equity Deal?

Private companies can carry more risk as an investment due to the lack of information available to public investors. This is part one of a two-part series that breaks down important factors to look for when evaluating a private equity investment.

 

Important Factors to Consider

Some important factors to consider when evaluating private companies as potential investments are:

  • Stable and Recurring Cash Flow - Positive free cash flow that is stable and recurs year after year
  • Value Creation Opportunities - Done through operational improvement, multiple expansion, or deal structuring
  • Sustainable Competitive Advantage - When buying a company with a competitive advantage, investors should fully understand the systems, processes, patents, people, or other sources of the competitive advantage and ensure it will continue as the company matures  

Get our free one-page summary for this topic

Receive our popular one-page summary that summarizes this topic into concise and digestible concepts for free!