If you’re looking to know more about private equity, reading a book is still one of the best ways to get immersed in the subject. If you are interested in making a career in private equity or want to invest some money in it, reading some of the best private equity books will be very helpful for you. In this article, we will take a look at some of the best private equity books for you to read. Let’s get started.
How wide varieties of private equity books exist?
Private equity books typically come in four primary varieties:
Books that address every aspect of the private equity sector in depth.
Books geared for investors that teach how to invest in private equity
Private equity books seek to provide a unified “model” for a successful PE transaction.
Case study books that investigate the causes for the success or failure of genuine private equity transactions.
Why should we read books on private equity?
Financial statements and Excel sheets are essential tools for examining the financial characteristics of a firm or transaction. However, they often only provide half the story due to a lack of contextual information.
Context may give the crucial facts necessary to comprehend the motivation, strategy, and real-world perspective behind specific actions. You must augment your study with books and other resources, such as case studies, to fully understand the complexity of the private equity market. There is a limit to what can be learned from technical analysis and financial modeling.
One of the famous investors, Warren Buffett, acknowledges the significance of acquiring knowledge. “Every day, read 500 pages like this,” he said. “This is how knowledge operates, and it accumulates similar to compound interest. You can all do it, but I promise that few of you will.”
When it comes to private equity, hedge funds, and venture capital, books provide excellent insights into the brains of some of the greatest dealmakers in history, including their adventures, achievements, and failures.
In this post, I list my favorite books on private equity. These books are filled with enlightening tales, astute financial transactions, larger-than-life characters, and innovative business ideas. We think that every private equity investor should read them.
These books are also recommended if you are interested in investing in other asset types, particularly the stock market. Benjamin Franklin once said, “An investment in knowledge yields the highest return.”
Best private equity books to read
1. The Masters of Private Equity and Venture Capital
This one is based not only on the author’s experience working at a variety of private equity companies but also on the experiences of several industry pioneers. Robert Finkel interviewed a number of private equity and venture capital heavyweights and documented their experiences.
This book is filled with tales and stories of great triumph, tragic failure, and the lessons gained along the road that provoke thinking. We strongly suggest it to financial professionals in capital markets, private equity, and investment banking.
The selected articles give perspective without delving into quantitative research or the complexities of valuations, transaction structure, etc. Instead, Finkel tackles important themes such as identifying new markets, choosing management, and applying private equity techniques to nonprofit companies.
One reviewer said, “A nice read for anyone seeking a qualitative perspective on the private equity and venture capital industries. Conversations with renowned investors explain crucial aspects of an investment thesis, enabling the reader to analyze and contrast various success strategies.”
2. Competition Demystified
Competition Demystified provides a novel definition of strategy. The author’s Bruce Greenwald and Judd Kahn simplify competitive analysis by emphasizing “barriers to entry” as the most important sort of competitive advantage. You will find value in this book regardless of whether you manage a startup or work in private equity and are focused on executing leveraged buyouts (LBOs) or conducting due diligence.
This book is appealing to us because it questions Michael Porter’s “Five Forces” paradigm, a standard component of every business school casebook. While the five forces model has a place in the field of competitive analysis, Greenwald and Kahn believe it is excessively complex and results in ineffective business strategy.
According to the authors, there are three distinct types of competitive advantage: supply advantage, demand advantage, and economies of scale. The book elaborates on how to profit from each strategy. There is no justification for a private equity fund to invest in a firm that does not have a clear edge in at least one of these areas (consistently high returns or market share).
3. Barbarians at the Gate
Bryan Burrough and John Helyaran’s best-selling investigative journalism book, Barbarians at the Gate, is about the demise of RJR Nabisco. It characterizes the economic atmosphere of the 1980s when small enterprises – and some major ones – were occasionally acquired for little more than their assets or the real estate they inhabited. Businesses were dismantled and liquidated once the profit from selling their assets exceeded the acquisition price.
This book is an excellent resource for learning about, among other pertinent issues, RJR Nabisco’s corporate finance strategy, the history of leveraged buyouts, and the role of bad bonds in LBOs.
Barbarians at the Gate documents dozens of primary characters (all of whom were interviewed by the writers directly) and hundreds of secondary characters. It teaches you how money, legal maneuverings, and personal connections influence strategy and finance at the highest levels. In some instances, arrogance, avarice, and egos are abhorrent. This book will help you comprehend private equity’s human and psychological aspects.
4. Cable Cowboy
If you loved The Outsiders but wanted that each narrative was more in-depth, then Cable Cowboy is for you.
This book tells the story of John Malone, a 29-year-old finance guy who became CEO of TCI, a small, indebted cable company in Denver, and was hailed as a hero by some and a villain by others. In the subsequent 25 years, he established a media monopoly that controlled the cable television business by coordinating complex financial transactions that sometimes circumvented certain regulations.
Malone was one of the most intelligent businessmen of his day. His rate of mergers and acquisitions was unprecedented. In 15 years, he closed an average of one transaction every two weeks and increased his company’s share price from $0.75 in 1974 to $4,184 in 1997. He often “overpromised” about his company’s capabilities and was prepared to utilize lawsuits to disrupt rivals and dominate industries.
The most important lesson in this book is about creating value. Malone did not achieve success through gimmicks or short-sightedness. He established 10- and 20-year plans, and he knew that judgments made with a long-time perspective provide the most value.
In addition, Malone was renowned for his innovative financial systems, which left many of his contemporaries bewildered. His use of debt finance and tax deferral at the time was unprecedented. This book will educate you on how big of an advantage a financially savvy, knowledgeable leader can generate.
5. Investment Banks, Hedge Funds, and Private Equity
This book on private equity covers the key three financial business segments. The author demonstrates with great care how investment banking, hedge funds, and private equity control the market and investor investments and profit-making. He also discusses strategies for returning to these areas after 2009. He proceeds by projecting the effect of these industries on the market as a whole.
The author has brought to life all three aspects of finance; these sectors compete with one another and survive in the market together or with each other’s support. He has also recorded the reconfiguration of these industries during the worldwide economic collapse of 2009-2010. Compensation systems, distinctive responsibilities in wealth creation, the conflict between retail investor funds, corporate influence, and risk management comprise the essential function. It is a comprehensive mix of academic background, examination of numerous sectors, and an explanation of the changes in the reinvention, stabilization, and reactivation of the economic market after 2009.
In addition, he provides a broad perspective on these sectors, demonstrating how these financial institutions impact other organizations, enterprises, governments, and people. He also explains why and how these industries will demonstrate their impact and strength in the future.
6. Lessons from Private Equity Any Company Can Use
This book proves that private equity investments provide more value to the investor than standard public equity investments. High returns may be the result of a strong brand or a large firm, the addition of portfolios to develop a worldwide presence, etc.
He also demonstrates how private equity companies become market leaders. Private equity companies employ the following five disciplines to get an advantage in investments and expand their portfolios:
Investments in these firms for their private equity must be made for at least three to five years. Investing in private equity over a longer period of time yields an averagely high rate of return.
A road map, also known as a change blueprint, must be developed in order to implement investment projects that should yield greater returns for your investments within a certain time frame.
What is important must only be measured; other information is irrelevant. For example, for private equity businesses, what is needed is crucial operational data, capital, and vital market knowledge; thus, the other irrelevant factors do not need to be monitored.
Private equity businesses must retain personnel with exceptional leadership and management skills. Employees who think like the organization’s owners. They should ensure that they employ such individuals, encourage them, and maintain their appetite.
The goal of private equity (PE) is to produce money; PE investors must make their equity work hard by leaving cash scars and compelling management to reinvest underperforming capital in a more productive path.
The author discusses private equity companies and the five disciplines they must possess and maintain for their equity to outperform standard registered public equity. The explanation for why certain private equity companies do better than others has been a mystery to those who are not involved in the transactions or the business. The whole of the book provides an overview of private equity companies and their activities. It also indicates that high risk yields high rewards, which is an industry-wide reality.
7. Inside Private Equity: The Professional Investor’s Handbook
Inside Private Equity is likely one of the greatest introduction books on private equity. It provides a detailed summary of the industry. Using clear examples to explain a number of private equity principles. This is an excellent private equity book for those who are new to the sector and want to understand the fundamentals. The reader will be able to study some of the most fundamental concepts, such as IRR, and will have access to examples that will aid comprehension.
8. King of Capital
King of Capital describes the private equity firm The Blackstone Group and its CEO, Steve Schwarzman, analyzing the history and exploits of people who did the business what it is today.
The authors do an excellent job showing how Blackstone (and other private equity companies) have converted from gamblers and hostile-takeover artists (i.e., “barbarians at the gate”) to disciplined and risk-aware investors.
King of Capital is an engaging blend of personal anecdotes, business trends, and the history of individual transactions from which patterns may be gleaned. It provides a great deal of insight into the operation of LBOs (leveraged buyouts), from their early links to junk-bond finance to the large rounds they’ve raised in recent years.
9. Investing In Real Estate Private Equity
Investing in Property Private Equity is a guide to investing in real estate through private offers with well-established corporations. The passive investment strategies for wealth creation and income generation outlined in this book have historically been used by some of the world’s most skilled institutional investors but are now accessible to practically everyone as a result of recent legislative reforms. This manual will walk you through the process of constructing your own diversified real estate portfolio by selecting and investing with seasoned private real estate operators.
This is not another quick-money real estate flipping gimmick. You will NOT be urged to attend conferences or clubs to learn a no-deposit investment method. This IS a practical book designed to help you avoid common errors and navigate a sometimes complex business with more expertise. What is a private real estate investment? The mechanics of syndicates, funds, and crowdsourcing. How to build and implement a customized investment plan.
The majority of individuals grossly misjudge the time commitment, complication, danger, and overall brain damage associated with purchasing real estate directly. Private real estate investments give the majority of the same advantages as direct ownership while using the years of experience, market knowledge, industry reputation, bargaining power, and expertise of established real estate organizations. Moreover, they enable investors to diversify their investment allocation across a variety of real estate product categories (multifamily, retail, office, self-storage, etc.) and throughout the capital stack (equity, debt, mezzanine, and preferred equity) while working with experts in each strategy. Written by a practitioner with more than $5 billion in transactional experience, this book challenges common knowledge and reveals how the business truly operates. Using the practical techniques and strategies presented in this article, you may develop your own unique real estate portfolio, manage risk, avoid common errors, generate money, and have fun.
The bottom line
Private equity books are an excellent source of knowledge for financial professionals and anybody else interested in the subject. Whether you are a student or an industry professional, this is a fantastic resource for learning more about private equity. Some of the books on this list are introductions to private equity, and those are highly recommended for beginners. Some courses, however, are more sophisticated and include various private equity strategies and case studies.
What is the role of a private equity firm?
Private equity businesses are meant to generate returns for investors within a certain term, often between four and seven years. Investment firms are organizations or investment managers that obtain funds from rich individuals to invest in current or new businesses.
How can one get access to private equity?
You may join a private equity company as an Operating Partner or Consultant if you are a senior banker with previous experience. And if you have an MBA and investment banking expertise, you should consider joining a private equity company as a post-MBA associate.