Private Equity Investment Strategies
Private equity has the potential to offer enhanced returns and an expanded opportunity set beyond public markets. Private equity generally refers to equity investments in companies whose shares are not listed on public stock exchanges. These investments typically fall into three main categories differentiated by stage: venture capital, growth equity and buyout.
Why invest in private equity?
Return potential
Early-stage investing can capture the rapid growth of promising companies, and a higher degree of control and influence over investments.
Established market
The depth of the private markets means more companies are choosing to stay private as they grow, avoiding the enhanced oversight, increased disclosures and loss of control that come with the traditional route of listing on the stock market.1
Expanded opportunity set
Private equity can offer access to a broader opportunity set than public markets, including exposure to emerging companies in the earliest stages of growth and development.
Impact Investing in Private Equity
Explore how private equity can help resolve today’s greatest environmental, healthcare and educational challenges.
Learn More
Ready to invest in private equity or other alternative investments? Find the strategy that works for you with your J.P. Morgan team today.
Manager selection is key
While the potential for premium returns makes private equity attractive, manager selection is critical to success. Private equity fund performance is primarily attributable to a manager’s ability to take advantage of return drivers that are different from those of other asset classes, including traditional public equities. The difference in results between top-performing and bottom-performing managers has been significant. On average, there has been a 20% gap between top-quartile and bottom-quartile private equity managers over the last 10 years.2
Private equity investment strategies
Private equity offers access to a broader opportunity set than public markets, including exposure to emerging companies in the earliest stages of growth and development. Early-stage investing can capture the rapid growth of promising companies, and a higher degree of control and influence over investments.
| VENTURE CAPITAL | GROWTH EQUITY | BUYOUT | |
|---|---|---|---|
| Description | Foundational capital for startups with growth potential | Expansion capital for younger, fast-growing companies | Focuses on control and minority stake investments, typically in developed markets |
| Typical holding period | 5–10+ years | 2–3 years | 4–6 years |
| Typical exit strategy | Mergers and acquisitions (M&A), and occasionally initial public offerings (IPOs) | Strategic sales, secondary buyouts and initial public offerings (IPOs) | Mergers and acquisitions (M&A), initial public offerings (IPOs) and recapitalizations (recaps, dividends/dividend recaps) |
