Private Equity Group (PEG)

Last Updated: Jun 7, 2019

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A Private Equity Group, PEG or Sponsor, invests equity (and sometimes debt) into companies with hopes to improve the business, or merge it with a similar business and eventually sell the it at a higher price. Usually, a Sponsor will use a combination of debt and equity to buy a company, and then take money out as a dividend. PEGs can take a minority or majority stake of a company as well as provide debt financing, usually as a 2nd lien or a Last out position with higher pricing. PEGs often specialize in a certain industry that they have expertise in, thereby allowing them to create value in the companies in which they invest.