PRIVATE EQUITY FIRMS burst into the spotlight in the 1980s, as portrayed in the classic book on KKR’s takeover of RJR Nabisco, Barbarians at the Gate. Investing with the barbarians can be very lucrative, but it’s financially possible only for the megabucks crowd—institutions like pension programs and very rich individuals. That type of well-heeled investor can become what’s known as a limited partner in one or more of a private equity (PE) firm’s funds (each fund has a collection of companies in its portfolio). Plus, a limited partner must be an “accredited investor,” meaning having a net worth of at least $1 million and annual income of $200,000 or more.
For limited partners, private equity beats the overall stock market and, in tough times,
