Posts by Duurt Jan van Dijk

Private Equity is an alternative investment class specializing in the acquisition and investment in privately held companies absent from public stock exchanges. Private Equity firms strategically acquire companies, implementing significant transformations to optimize profitability upon eventual resale. This investment sector predominantly targets small to medium-sized enterprises (SMEs), including the Dutch MKB, recognized as the core…

Private equity firms commonly deploy various strategic approaches to achieve their investment objectives. These strategies encompass A) leverage buyouts, B) growth capital investments, C) venture capital initiatives, D) secondaries, and E) fund of funds structures. A) Leverage Buyout (LBO) Leverage Buyout is the most prevalent strategy, involving equity investments in transactions where a company, business…

Investors, referred to as Limited Partners (LPs) in the Private Equity (PE) domain, allocate capital to the private equity firm. The Private Equity fund is set up by the Private Equity Firm (also called the Fund Manager or General Partner). They have the responsibility for fund management and actively participates by investing in the fund…

The J-Curve graphically illustrates the returns and cash flows associated with private equity investments over time. Initial negative cash flows in the early years reflect investment and fund costs, funded through capital calls. The latter part of the fund’s lifespan showcases positive cash flows driven by dividends and exits, marking the returns on investment.

Why investing in Private Equity? The primary motivations for investing in Private Equity include: Access to a diverse array of investment opportunities not available in public markets. Robust & high long-term return potential. Historically proven resilience during market downturns. Diversification benefits, allowing investment across a broad spectrum of industries. Support for the foundational SMEs, contributing…

A Fund of Funds (FoF) is an investment strategy where a single fund invests in a diversified portfolio of other investment funds, particularly in the context of private equity. This approach offers investors broader diversification, access to top-performing funds, professional management expertise, and the ability to tailor exposure to specific strategies or markets. It’s a…

Investing in private equity as a private investor involves careful planning and consideration. The main investment options are A) direct investments, B) private equity funds, C) co-investment opportunities and D) Fund of Fund (FoF). It is important to understand the unique aspects and risk-return profiles of each. Because of the high treshholds of the better…