Private-equity partnerships avoid the free cash flow problem that often troubles conglomerates.

Question

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Private-equity partnerships typically have a focused investment strategy, meaning they invest in specific industries or sectors. This approach helps avoid the free cash flow problem that is common in conglomerates, where excess cash may be allocated to less profitable or unrelated investments. Private-equity partnerships generally have a more hands-on approach to managing their investments, which can lead to better allocation of resources and increased profitability.

Private-Equity Partnerships Avoid the Free Cash Flow Problem That Often