Private Equity Explained in Simple Terms: A Guide for Founders and Entrepreneurs

Private Equity Experience

In this inaugural episode of The Private Equity Experience (PEX), we're taking the first step in exploring the world of private equity. We'll introduce its role in today's business landscape and explain how it's become a valuable option for small businesses.
Whether you're a founder considering private equity for growth capital or personal liquidity or simply curious about how private equity compares to venture capital, this episode provides a great starting point.
We'll cover the basics of private equity, including leveraged buyouts and assets under management, to give you a solid foundation in this crucial part of the global economy.
We'll give you a clear understanding of private equity firms, how they manage investments, and the importance of transparency and due diligence in PE transactions. You'll also get an introduction to how private equity funds are structured and how they aim to increase value through operational and financial efficiencies.
Links Mentioned:

• Private Equity Experience Website

Timestamps:
0:00 - Introduction to the podcast and hosts
2:01 - Emily's background and experience with private equity
3:51 - Ed's background and experience in private equity-backed businesses
6:41 - Rory's background in financial services and private equity
8:44 - What is private equity, and what gap does it fill in the market?
10:33 - Historical context of private equity's development
14:07 - Explanation of assets under management (AUM) in private equity
15:32 - Definition of leveraged buyout (LBO)
18:10 - Major players in the private equity space
19:45 - Explanation of limited partners (LPs) and where PE firms get capital
23:52 - How private equity firms make money (management fees and carried interest)
28:17 - Reasons why founders might consider private equity funding
32:39 - Different types of private equity firms and their focus areas
33:49 - Who is not a good fit for private equity funding
35:32 - How private equity differs from venture capital and other types of investors

Who We Are

If we haven’t met before—Hi! We’re a team of professionals who’ve worked together at multiple companies, seen private equity from all sides, and are here to share what we’ve learned to help you succeed. Ed Barton brings decades of tax and financial strategy experience; Rory Liebhart is a finance and M&A pro with a track record of high-growth exits; and Emily Sander is a former Chief of Staff, multi-time author, podcast host, and founder of Next Level Coaching, helping leaders and organizations accelerate their growth.

Connect with Ed

Connect with Emily

Connect with Rory

Chapter

1. Introduction to the podcast and hosts (00:00:00)

2. Emily's background and experience with private equity (00:02:01)

3. Ed's background and experience in private equity-backed businesses (00:03:51)

4. Rory's background in financial services and private equity (00:06:41)

5. What is private equity, and what gap does it fill in the market? (00:08:44)

6. Historical context of private equity's development (00:10:33)

7. Explanation of assets under management (AUM) in private equity (00:14:07)

8. Definition of leveraged buyout (LBO) (00:15:32)

9. Major players in the private equity space (00:18:10)

10. Explanation of limited partners (LPs) and where PE firms get capital (00:19:45)

11. How private equity firms make money (management fees and carried interest) (00:23:52)

12. Reasons why founders might consider private equity funding (00:28:17)

13. Different types of private equity firms and their focus areas (00:32:39)

14. Who is not a good fit for private equity funding (00:33:49)

15. How private equity differs from venture capital and other types of investors (00:35:32)