There are many people who like to call themselves private equity investors, not in the least because this is a world of big money. In reality, however, few can truly make it in this world, because the smallest mistake can cost millions and most people are quite unforgiving of losses of that magnitude. Gregory Lindae, a seasoned veteran in the world of private equity, has come up with six “secrets” that anyone in the business should be aware of if they want to be successful.
Secrets to Successful Private Equity Investments
- Be in the right place at the right time. Ideally, a private equity investor is able to find out about opportunities before anybody else. Usually, they do this by networking with entrepreneurs in online meetings, conventions, business events, and so on. Good investors, therefore, are always on the move, looking for the next big deal.
- Always research an opportunity. Good investors have a distrustful nature. Even if a company gets tons of positive feedback, no complaints at all, and offers airtight projections, there is always a “what if”. A good investor finds companies that focus on a sustainable and large market, who have an excellent exit strategy, and who have realistic financial projections in place.
- Always evaluate the management and leadership team. Good firms worthy of investment have strong management teams in place. This means there is a good business opportunity that attracts talent. Management teams should have years of experience and they should be able to demonstrate high investment returns.
- Always look at the exit strategy. Private equity projects are eventually refinanced or sold, at which point the liquidity event or exit strategy should kick in to offer investors’ their rewards. The exit strategy should be properly understood before embarking on a project.
- Always exert due diligence. A good private equity investor looks for funds that are in line with their own goals for investments as well. This means that they will peruse over the business plan of a prospective company, read all the information that is available, ask a thousand questions, and more. Only then should they even begin to consider whether or not to invest.
- Focus on diversification. Private equity is a form of investment and any financial expert will tell you that the only stable portfolio is a diverse portfolio. Through diversification, and particularly in private equity, money becomes more secure. While it means that gains may not be as massive as they would be if all money was invested in a single project, it also means that losses aren’t absolute.
Good private equity investors know all of this. Those looking for private equity investors, however, often don’t know this. According to Gregory Lindae, becoming more aware of how things work – or should work – will ensure that people gain greater security with their investments as well. Research, due diligence, and a healthy dose of common sense is all that is really needed in terms of choosing a private equity expert to work with.