Do PE firms function like investors

Well, first of all PE firms are investors. Though there is a specific characteristic that makes them a special form of investors: Unlike other forms of investors, they take over the management (incl or excl the original management team) and actually improve the operations. To do so, they will typically install management personnel that is well aligned wtih them and has a consulting or PE background to make difficult decisions.

Hi there,

I would take it much further than just" advice". If you invest, you get a voting share of the company. If a PE firm invests, it owns the company. Therefore, it makes any changes necessary to get maximium value/returns out of the acquired company.

PE firms (particularly in a case) will buy a company for any of the following reasons:

1. The firm is undervalued (we see value that the market doesn't). Translation: Home flipping
2. The firm has huge potential if we just change a few things. We'll buy it, fix it, and sell it (this is where their expertise may come in).  Translation: The home is a fixer-upper
3. The firm's parts are greater than it's whole. Well buy it and carve it out (1+1 = 1). Translation. Buy a plot of land and subdivide.
4. Multiple firm's together are worth more than apart. We'll buy them and combine them (1+1=3). Translation: Buy a few plots of land and build a megadevelopment.

Hi, differently from classical investors they usually take control of the company, or at least they place many new managers on the company board. With consulting support, new investments and synergies across other firms in the portfolio, they usually boost the company value in 3-5y

Best,
Antonello

Private equity is a very broad space by definition which would go from VC to large cap PE. The "advice" or leverage that the investor has can really vary from buyouts where the investor has majority stake to make management decisions, to minority stake where the investor may or may not have a board seat.