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Arnerich Massena is pleased to announce the publication of a new white paper: Private Equity 101: Understanding the Fundamentals of PE Investing. The white paper helps investors gain familiarity with how private equity investing works, the stages and types of private equity investments, and the unique risks and benefits of investing in private markets.
The complexities of private equity have acted as an obstacle for many investors, and investing in public markets alone can be a limiting factor, causing them to miss the opportunities that private markets increasingly represent. Understanding the fundamentals of private equity investing can help investors become more confident in this environment, opening the door for accredited and qualified investors to access the remarkable opportunities of investing in private companies. Arnerich Massena has decades of experience navigating these markets, and in this paper, the firm lays out a foundation for interested investors.
“Over the last twenty years, we’ve witnessed the shrinking of the public stock market while the private market has rapidly expanded,” says Co-CEO and Chief Investment Officer Bryan Shipley, CFA, CAIA. “Return expectations for public stocks are much lower today than they were a couple of decades ago, so now many of the best opportunities to capture rapid growth can only be accessed through private market investing. We recognize that PE investing can be daunting and uncomfortable for investors not familiar with the process and strategies of building a private equity portfolio; our goal is to provide some of the basics for investors who might be interested in exploring private equity.”
Co-CEO and Senior Investment Advisor Reegan Rae, CPWA® adds, “We have been working with clients since the 1990s to build private equity portfolios, and have been very successful in crafting long-term, well-performing PE allocations. But it’s a very unique asset class, and it’s important for investors to understand how the J-curve works, how to build a commitment strategy, how liquidity is affected, and what to expect as a private equity portfolio matures. Having that foundation can help them become a better PE investor.”
The paper defines private equity, outlining the stages of a private company from seed capital/start-up to venture capital to growth equity to late stage. The paper’s authors discuss why private equity offers such strong opportunities for investors, while also describing the particular risks of the asset class, such as liquidity constraints and the necessity for a long-term commitment.
Click below to read and/or download the white paper.