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A "J curve" plots the funds a private equity firm draws down from its investors over time.
To start with, the private equity firm draws down cash from investors and cash flow for investors is negative (the lower and initial part of the "J"). As time goes on, the private equity firm starts distributing funds back to investors, and cash flow becomes positive (the upper part of the "J").
The steeper the J curve, the quicker cash is returned to investors. A private equity firm that can make quick returns to investors provides investors with the opportunity to reinvest that cash elsewhere.
Of course, investors and private equity firms have been caught out. Private equity firms have found it harder to sell businesses they previously invested in. Proceeds to investors have reduced. J curves have flattened dramatically.
This leaves investors with less cash flow to invest elsewhere. For example, in other private equity firms. As a result, private equity firms have had to restructure their agreements with investors, allowing them to renege on previous funding commitments.
The implications for private equity could well be severe. Being unable to sell businesses to generate proceeds and being unable to invest as much as they expected is dire news for this segment of the funds management industry. Lower funds under management means lower fees and some in the industry are predicting consolidation amongst private equity firms.
This entry has been published by Financial Training Company http://www.financialtrainingassociates.com/
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What is private equity and how does it work?
Private equity is the personal ownership of stocks. Equity is a form of ownership of a company and you can be involved in private equity simply by building a portfolio of stocks that you own.
What is NBGI Private Equity's population?
The population of NBGI Private Equity is 45.
When was NBGI Private Equity created?
NBGI Private Equity was created in 2000.
When was The Journal of Private Equity created?
The Journal of Private Equity was created in 1997.
When was Electra Private Equity created?
Electra Private Equity was created in 1976.
What is the population of AXA Private Equity?
The population of AXA Private Equity is 250.
When was AXA Private Equity created?
AXA Private Equity was created in 1996.
Where can you find lists of private equity firms?
a list of Connecticut private equity firms
How can I use my private equity to get a loan?
Private equity is money that is invested in companies that is not publicly traded on the stock exchange. It is strictly regulated and does not pertain to residential properties. Private equity is a loan from a private investor.
What is the nature of the J-curve?
example of a J-curve population in nature? Explain.
What letter will the letter j be if you erase the curve?
j without the curve would be i
Where can you find work in the private equity field?
One can find work in many positions in the private equity field. Some entry level positions are private equity consultant, financial assessor, and private adviser.
