What are the main stages of the private equity investment cycle?

The primary stages of the private equity investment cycle are accurately encompassed in the response that highlights fundraising, the investment period, portfolio management, and exit. Fundraising serves as the initial step, where private equity firms accumulate capital from investors to create a fund.

Following fundraising, the investment period involves identifying and acquiring companies that align with the firm's investment strategy. During this stage, the focus is on selecting the right investments that have the potential for growth and value creation.

Portfolio management takes place after investments are made. This entails actively managing the companies within the portfolio to enhance their performance. This can involve implementing operational improvements, strategic guidance, and financial restructuring to increase the overall value of the investment.

Finally, the exit stage occurs when the private equity firm sells its stake in the portfolio companies, often through mechanisms like an initial public offering (IPO) or a sale to another private equity firm or strategic buyer. This stage is crucial as it realizes the returns on the investment made during the previous phases.

The progression through these stages reflects the structured and cyclical nature of private equity investments, effectively maximizing value for investors while managing risks throughout the investment's lifecycle.