1. When contrasting venture capital firms (VC) with private equity firms (PE), which of the following statements are true.
I) PE firms generally invest in companies with steady and predictable cash flow.
II) PE firms tend to invest in companies whose products are not yet proven in the market.
III) PE firms typically use leverage (debt capital) in a firm’s capital structure while VC firms typically fund purchases with equity.
IV) None of the above
2. One mechanism by which private equity firms do not typically create value for their portfolio companies is through:
Ability to reengineer organizational structure
Ability to access credit markets on competitive terms
Ability to liquidate the assets
Alignments of interest