The article discusses the rise of platform companies within the secondary market, highlighting their role in providing private equity opportunities. These companies, unlike traditional private equity deals renowned for illiquidity, offer more liquidity and faster access to capital for investors. Platform companies are created by PE firms to acquire add-on companies, enhancing investment value before eventual resale. The approach enables pre-IPO investments, allowing investors to quickly cash out and reallocate resources, significantly changing the private equity landscape.
Traditional private equity (PE) deals are infamous for their illiquidity, especially among investors who like having quick access to capital.
PE firms create platform companies to sell them later for a higher value. Moreover, such investors want returns on their investments as soon as possible.
It's a great opportunity for pre-IPO investments. Better still, secondary market transactions provide much more liquidity, as investors can cash out their stocks swiftly.
Providing liquidity in a notoriously illiquid investment is a ground-breaking advancement already.
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