Definition - What does Portfolio Company mean?
A portfolio company is a single investment for an investment firm's overall portfolio. The investment may be used to develop equity in a particular portfolio company, buyout the portfolio company, or both.
Divestopedia explains Portfolio Company
When choosing portfolio companies to add to their investment portfolio, private equity, venture capitalists and other investment firms look for additions that could add diversity and growth potential to their portfolio. Oftentimes, middle-market firms are acquired because they carry less risk than start-ups, but still have room for significant growth.
For mid-market entrepreneurs reviewing the list of a private equity's portfolio, companies will provide valuable information to determine if that private equity firm would be a suitable acquirer of a target business. This list could also be a source of research to evaluate and compare companies that are ideal private equity candidates.
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