Frequently asked questions (FAQs)
Do you have questions about private equity? Our FAQs provide most of the answers.
Private equity often provides higher returns on average than the equity market and also tends to be less volatile. On the other hand, investments are less liquid. The initial investment amount tends to be quite high, and it is also more difficult to offload the investment, as it is not traded on a public platform such as a stock exchange. Private equity investments are therefore not suitable for investors with a short-term horizon.
Private equity is the general term covering the entire market for equity and venture capital. Institutional or private investors can either participate directly in unlisted companies or make their capital available to private equity funds, which then buy shares in suitable companies. A distinction is made between the venture capital market, where the capital is used to finance start-up companies, and private equity stakes in privately owned small and mid-sized companies.
Private Equity Invest AG acts as an intermediary for the sale of existing investors’ holdings directly to other investors (secondary or OTC market). In other words, it identifies potential buyers of substantial equity stakes owned by existing investors who are keen to sell. Here Private Equity Invest AG only agrees to act as intermediary if it believes that the private equity stake is an attractive investment (see Our investment criteria).
There are many reasons why a company may require access to private equity, so it’s impossible to give a simple answer to this question. Just as when buying the shares of any company listed on the stock market, the decision to purchase an equity stake must be preceded by a thorough analysis of the company, its business model and its competitive environment, on the basis of clearly defined criteria.
No, private equity investors generally have a long-term horizon and are confident that the unlisted company they have chosen represents a worthwhile investment. Continuously developing a business and implementing an expansion strategy ties up capital and takes time. Investors need to be patient as well. They must be aware that the possibility of superior returns also carries higher risks.
Private equity investments are suitable for both institutional and private investors. But they are not suitable for small investors or anyone with a short investment horizon. At the same time, investors should be aware that the prospect of higher yields also carries a greater degree of risk.
The initial minimum investment is often fairly substantial because the packages of shares sold on the secondary market tend to be quite large. Given the increased risk associated with private equity investments, investors should be careful to only commit an amount that they can afford to possibly lose.
Private equity is not suitable for anyone with a short-term investment horizon.
Every investment carries risks. Although private equity investments promise superior returns, the associated risks are also higher. Investors must bear this in mind.
Every investment carries risks. The key point is that investors are aware of these risks and also take them into account in their investment strategy.
Switzerland’s main industry organisation is the Swiss Private Equity & Corporate Association, SECA. It represents the interests of private equity and corporate finance bodies vis-à-vis the relevant target groups and general public. It also encourages the exchange of ideas within the industry and collaboration between members and their clients. It promotes continuing professional development within the industry and the drafting of codes of conduct and their implementation. Private Equity Invest AG is a member of SECA.