Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it.

I'm your host David Stein. Today is episode 490. It's titled, Should you Invest in Private Equity?

Recently I received an email from a member of our premium community

money for the rest of us plus he was asking about private equity and he

pointed out that in much of the world the stock market is expensive and investment

money is looking for opportunities yet there's a lot of capital already raised to invest in private equity

and he was curious whether that would impact returns.

How has private equity performed? and we're going to discuss that in

this episode including what is private equity, and can we as individuals participate in this asset category that has been very successful

for institutional investors.

Private equity consists of really three areas, buyouts, growth capital, and venture capital.

Buyouts is when a fund or

investors acquire a publicly traded or even a private company outright

and they'll often use debt,

they'll borrow money to help finance that purchase.

That's why buyouts are sometimes called leveraged buyouts.

The management team is actively involved

in this company purchase, improve operations to grow the business.

But these are typically established businesses that have publicly traded

publicly traded, so they have publicly traded stock,

a fund might raise capital to purchase

that publicly traded company and take it private.

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