The PE investment model is built on the premise that companies can improve their performance and better position themselves for long-term success by aligning the interests of owners and managers and removing the short-term pressures of public ownership.
This combination creates an environment that allows owners and managers to bring expertise and greater strategic focus to business operations, more efficiently allocate capital to improve performance and productivity and create better incentives to drive success.
In many cases, PE ownership drives a process of rapid change, where new business plans are devised, new management is brought in to execute the plan, strong board-level leadership is cultivated to ensure disciplined execution and new incentives are created to reward success. These aspects allow PE firms to improve the operations, governance, capital structure, and strategic position of the companies in which they invest — ensuring that the company is better able to compete for market share in a global economy.
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