What are private equity firms?
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They are companies that raise pools of investment capital to acquire large/controlling stakes in companies or acquire them entirely. Sometimes, they are a means for a founder to extract liquidity from a company as they get to retirement age or focused on estate planning (Here in Chicago, regional restaurant chain Portillo’s sold part of the company to a PE firm about 15 years ago, then the rest of the company a few years later when owner retired. The PE firm funded expansion to new markets, then an IPO). Often, they target companies that seem to be lagging their peers or ripe for operational improvement, so that the companies can be sold or IPOed for a profit after a turnaround. Other times, the companies are acquired to dismantle and sold off division by division, etc. to extract more value. Sometimes, they seem to be nothing more than grave robbers, acquiring companies, extracting assets while saddling the company with debt that kills it off (ie. Toys R Us).
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