In this article we are going to list the 15 biggest private equity firms in the world. Click to skip ahead and jump to the 5 biggest private equity firms in the world. Private equity firms play a huge role in making or breaking businesses. These firms provide financial backing to businesses by investing in their private equity. Often after an initial investment, businesses get stuck in a chasm due to a lack of financial resources and that is often what leads to failure. Thus, sometime for investing more than affordable loss, organizations, especially startups, need the help of private equity firms to generate the necessary traction that is needed to get them recognized in their industry and field of operation.
Typically, private equity firms raise funds from various individual and corporate investors and make investments in the private equity of an organization for which they receive a periodic management fees as well as an agreed upon percentage of the profits. The private equity firm works to increase the value of the organization and maximize the return on the investment that it has made. This is done by undertaking various actions such as changes in technology, human resource, research and development, product portfolio or the overall corporate strategy, goals, and mission of the organization. Private equity firms are not about short-term investments into more liquid assets like those made by hedge fund firms; instead. they provide longer-term investments in organizations that operate within their area of expertise and take up operational roles bringing in substantial changes in the organization’s structure and strategy.
With private equity firms the reward is huge, but the risks associated with it are also massive and if the changes brought about do not work the organization ends up bankrupt. Once a private equity firm is done investing in an organization and bringing about the necessary changes it exits by either mergers and acquisitions whereby the company is sold for cash or an exchange of shares or an Initial Public Offering (IPO) whereby the company’s shares are offered to the public market for trading.
Private equity firms are often struck with controversies and said to be operating on vulture capitalism. This is not true for most established firms but to some extent the modus operandi of private equity firms is such that those rich investors end up making huge profits while the employees and the working class suffers as they are often laid off in the name of restructuring which really is downsizing. Moreover, many a times private equity firms make such investments that pay off huge returns and profits in the short run and when the firm takes an exit the organization soon begins to crumble down and run into losses or worse bankruptcy. However, there is a difference between private equity firms and investment companies, more of which you can learn about in the 15 largest investment companies in the world.
The Wall Street Journal carried out a survey on a renowned private equity firm called “Bain” in which it found out that 22% of the organizations that Bain invested in either filed for bankruptcy or shut down within eight years of Bain’s exit. However, there are almost as many success stories as there is evidence of failure and thus private equity firms are still more than relevant in the business arena. Perhaps the time and development stage in which the organization is, is extremely crucial in determining whether going for a leveraged buyout through a private equity firm is a great idea or not. If a company is already making losses and is headed towards bankruptcy going for a leveraged buyout is smart as the right kind of investment influx might stabilize the company and help it remain a going concern. Hence, for the above-mentioned reasons and many more private equity firms are very important for businesses. Following is a list of 15 biggest private equity firms in the world with the highest success rates and returns on investment. The rankings and listings have been compiled from PEI 300 index, Fortune and Visual Capitalist. So let’s take a look at the biggest private equity firms, starting with number 15:
15. Thoma Bravo
Thoma Bravo is a US-based private equity firm which is quite well-known because of its long-standing history of more than 40 years. The company’s focus and expertise lie in making investments in software and technology companies mainly and is seen as one of the best private equity firms in the tech industry. The firm has more than 270 acquisitional transactions on its portfolio and is seen as the pioneers who introduced the build and buy strategy to the technology and software industry.