Private equity and debt: why should people invest in Private markets

Abstract

The purpose of this thesis is to walk investors through the processes and methods used by Private Equity Funds and the economics of Small and Medium Enterprises (SMEs). Small Businesses, are generally private and their shares are not traded on public markets, thus their evaluation may be difficult and their market is characterized by an intrinsic informational opacity although despite these characteristics, private markets have attracted many investors in the latest years. In later parts of this paper we will see how funds and individuals (namely Business Angels) screen, monitor and invest in private business and the evolution of this phenomenon across the world and in territories whose general economy is based on SMEs. The ultimate question which we are going to answer is: why should investors consider private markets and in what cases they should not consider this option.