Part 2 - 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 twp 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:

  • Strong Market Position - Consider the Total Addressable Market (TAM) and the future of the market in addition to the company's position in the market
  • Strong Management Team - Perform research to identify if company success was triggered by managerial decisions or if the company benefited from industry tailwinds 
  • A Good Price - Build proprietary deal flow, negotiate well, and focus on special situations like bankruptcies or restructurings

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