Mailbox Money Rollups: The Minority Stake PE Strategy

Thomas Sowell says, there are no solutions, only tradeoffs. I believe this maxim is virtually axiomatic. Here, we apply Sowell's maxim to explain a simple but key difference between ways some private equity managers invest the capital of the private funds they manage. Most casual observers of the financial markets know that private equity frequently uses a buyout strategy whereby the funds take a majority position in their portfolio companies and fund management locks arms with leadership of the portfolio company to control the business. But what is the tradeoff when the private equity fund takes a minority position?

We hope you enjoy this simple and fund video. Stay tuned for a "follow-on" where we tie the concepts of this video to the splashy current events of evergreen funds.