Many wonder why private equity investment is often reserved for those who can deploy significant capital. The answer lies in the extensive analysis and selection work that private equity funds undertake before deciding which company to invest in.
Due diligence: a complex and costly process
Before investing, funds conduct thorough due diligence: a detailed analysis covering financial, legal, tax, and operational aspects of the target company. This process requires time, resources, and the involvement of highly qualified professionals, with costs that can be substantial.
A guarantee of reliability and security
Precisely because due diligence is so thorough and demanding, private equity funds prefer to focus their efforts on significant-sized operations. This approach ensures that each investment is supported by rigorous analysis, reducing risks and providing greater security to investors.
Ultimately, access to private equity requires significant amounts not only due to the nature of the investments but especially to ensure a serious and reliable selection process. This represents protection for investors and a quality guarantee for selected companies.