What does FCF stand for in relation to private equity?

FCF stands for Free Cash Flow in relation to private equity. It represents the cash generated by a company's operations after accounting for capital expenditures needed to maintain or expand the asset base. Free Cash Flow is a crucial metric for private equity investors because it indicates a company's ability to generate additional cash that can be used for purposes such as reinvestment, paying down debt, or returning capital to shareholders.

In the context of private equity, understanding a company's Free Cash Flow is essential since it can significantly affect the valuation of a company and its overall financial health. It provides insight into how much cash is available to the private equity firm for potential distributions or reinvestments, making it a key consideration during investment evaluations and exit planning.