FIN 502 Chapter Notes - Chapter 6: Barometer, Staling, Nyse Euronext

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Private equity vs selling securities to the public. Private equity is the term that is used to describe the financing for private companies. Venture capital market is a market where high risk ventures an obtain financing. Private equity funds raise funds from investors and invests in private companies. Private equity funds are similar to hedge funds where they are both investment companies made as limited partnerships that combine sums of cash from investors and then invest this on behalf of these investors. Hedge funds and private equity funds both use a 2/20 fee structure ( 2% annual management fee, 20% of profits are paid) Like hedge funds, private funds have constraints that prevent fund managers from taking too much cash. :like hedge funds, private equity funds charge high fees thus reducing the net return. Private equity funds have a high water mark provision and a claw back provision.

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