Investments

Private Equity – Exit Strategies


Jean-Michel Charette , Assitant Director, Investments

jean-michel.charette@bluebridge.ca

The evolution and importance of alternative investments in a financial portfolio are increasingly being addressed by financial advisors. Building on our texts in recent months where we looked at several elements related to alternative investment products, I’d like to focus on the question of private equity and the exit strategies pertaining to it. Generally, private investments have higher expected returns and less liquidity. Liquidity is generated at the time of the sale of stakes in a private company’s shareholding.

Historically, an initial public offering, or stock market launch, was the preferred strategy. Depending on the type of investment, it’s still the method prioritized by private equity firms, but other alternatives are now available, giving portfolio managers more flexibility. Other exit strategy options include the sale of stakes in another private equity firm that has a different expertise (financial restructuring, growth by acquisition or international expansion, etc.). Another option is the sale of a company to a strategic buyer (competitor, client, supplier). Finally, the private equity secondary market is growing and offers sellers attractive prices. Stay tuned, we’ll take a more in-depth look at these topics soon…

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By Jean-Michel Charette, M.Sc., CFA, CIPM, CAIA

10/04/2019

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