What Is Private Equity?

Redwood Capital Group pic
Redwood Capital Group
Image: redcapgroup.com

A resident of Greenwich, Connecticut, Gregory Bedrosian serves as the CEO and managing partner of Redwood Capital Group in New York. A graduate of the MBA program at Harvard Business School, Gregory Bedrosian draws on his extensive experience in private equity investing.

Private equity funds allow investors to secure a significant stake in a company. The process begins when a private equity firm collects individual contributions. Then it invests this capital in a target organization. Most such organizations are already operating outside of the public stock market or are being de-listed from the market to accommodate private equity investment.

Many private equity transactions involve a reorganizational process known as a leveraged buyout in which investors either purchase the firm from the owners or buy all the shares and take the company private. Investors may also choose not to assume control of the target company right away. In such cases, the equity invested will fund debt payments, organizational growth, or other operations that ultimately increase the investors’ stake in the company.

Private equity can end in a return on investors’ capital through an initial public offering (IPO), the sale of the target company, or a recapitalization from company operations. Returns may occur significantly more quickly than those driven by pure stock portfolios, although there is never any guarantee of an investment’s performance.

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