Private Equity – An active investment model

Private equity is a unique investment model based on a clear alignment of interest between the
private equity investor and the management team they back. This alignment is based on setting a clear
strategy for the business, a rigorous focus on operational improvement and value creation.

This paper seeks to explore the main elements of the PE investment model in each of the buy, hold and sell stages of investment. PE has always been recognised as a fundamentally different ownership model to those used by investors in public equities. The current review by the Financial Conduct Authority of the Asset Management industry, and particularly its focus on the differences between active and passive investment strategies, provides an interesting backdrop, allowing the many significant differences between the PE model and those of public equity investors to be highlighted.

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