Private equity firm Silver Lake has made major investments in large companies recently. So, who are they and how does private equity work?
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Have you ever heard of Silver Lake
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It's a private equity firm making big moves and scooping up some major companies
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Silver Lake began in 1999, around the same time many private equity firms began coming around
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Those firms basically take a pool of money from wealthy people to purchase stakes in privately held companies or purchase publicly traded companies
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You can think of this as literally a private investment and the equity of the business
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So let's say if you're an investor and I'm running a company and you want to invest in my company
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I get the financing and you get the returns. So this is basically a good deal for the both of us
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Silver Lake currently has more than $110 billion of combined assets. Their most recent was being a part of the purchase of video game company Electronic Arts
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Now that's just one of the dozens of companies they've bought or invested in
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including Waymo, Airbnb, Dell Technologies, and more. They also have heavily invested in several sports companies
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Firms like Silver Lake are a new way for companies to get money, as opposed to traditional means like a bank
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The end goal of all of these private equity funds is, in my opinion
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a lot of it is to make high returns, right? And why do they need these high returns Because they need to justify their investors And investors in these private equity funds are all sorts of big institutional investors Take Electronic Arts
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as an example. Each shareholder got $2.10 per share that they held, making the top shareholders
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extremely wealthy. Then maybe from the cash I get, I can start another company and then do this
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process again. That's how I become a serial entrepreneur, right, which I see happening a lot
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Not only in media, but I would say technology and health care
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So what if you're not a top shareholder or executive in your company and are an employee whose company is being bought by private equity
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As an employee, I would be very worried. And it's not only about my job, right
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It's also about the management changing. So let's say I have my job, but the management changes
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And now suddenly I have a new boss. I am under a different payroll system, for example, and then I have different expectations
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And then again, there's like, you know, this pressure of am I doing the right thing in my job
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and now suddenly the goalpost changes. Silver Lake did not respond to Straight Arrow News' request for comment
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For Straight Arrow News, I'm Lauren Keenan. If you want more on this story, download the Straight Arrow News app or visit san.com
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