Booyah Breakdown: Ticker Ditchers

And then, of course, there's also the pay scale. A private company can pay its people whatever it wants, without having to explain themselves to the public. Public companies have to let analysts rip their compensation plans to shreds. Remember Michael Ovitz and the shareholder outrage over his $140 million severance after working barely more than a year at Disney?

So because of all this, private-equity firms can keep and retain top-quality people who just need to focus on cash flow and strengthen the core business, says Barsky.

So How Do You Trade on Privacy?

Carefully.

Many of you were concerned about losing shares in a company you liked once it was taken private.

But ask yourself two questions. First, is your payout from the deal better than your original purchase price, a.k.a. cost basis? Second, is the business in need of transformational change? If you answered "yes" to both questions, then you should be happy to take the money, says MacKinnon. Otherwise, if the company is struggling, you risk losing money on your investment.

Now don't go nutty trying to pick the next buyout deal. The average premium paid over market prices for shares of acquired companies in 2006 was 17%, down from 25% in 2000, according to Thomson Financial. Still a good payout, but clearly falling. And with the economy (supposedly) slowing, there is some risk of these firms defaulting on all those loans. So the returns could start to slip.

Just tread cautiously.

And as an aside, pay attention to the supply of stock in the market. The private-equity boom is actually contributing to its decline. "Combined with cash acquisitions, record-breaking stock buybacks, and no better-than-average initial public offerings, the supply drain has been substantial," says Sonders.

So you need to keep your eye on the prize too. Just because investing in a private-equity firm's next hot takeover target sounds exciting doesn't mean it should be your exit strategy too.