Dossier. The Context
Focus. The State vs. The Market?
Strategy & Entrepreneurship
The Management of Financial Risks in Private Equity Funds
The management of financial risks in private equity (PE) funds aims to protect the internal rate of return (IRR) expected from investment in PCs due to unexpected variations in interest rates and exchange rates. The protection of the IRR requires a coordinated intervention on EBITDA, the EV/EBITDA multiple, and NFP.#The concrete possibility of planning and implementing financial risk management depends on certain business constraints: the availability of the liquidity that can be allocated to debt service, and to the purchase and use of financial hedging; and on the skills, technologies, and organizational/informational systems possessed by the company. The latter are not always present in either PE funds or in their PCs. Therefore, the question often arises of their acquisition on the market.