Private Equity
Investment in private (non-public) companies by PE firms.
Formula
Return on PE Investment = (Exit Value − Entry Value) / Entry Value × 100
Real World
Permira, a private equity firm, bought and restructured Dr. Martens, transforming it from a struggling brand into a globally profitable business before listing it on the London Stock Exchange in 2021.
Exam Focus
For 'evaluate' questions, always argue both sides: PE brings capital and expertise but may prioritise short-term profit over long-term strategy.
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