What is private equity?

Business & Management
#1

Private equity is a type of private financing that takes place outside of public markets and involves funds and investors directly investing in firms or buying them out. Investors in a private equity fund pay management and performance fees to private equity companies. The ease of access to other types of finance for entrepreneurs and firm founders is one of the benefits of private equity, as is the lack of quarterly performance pressures. The fact that private equity prices are not determined by market forces negates these benefits.

#2

Private Equity

Private equity typically refers to investment funds, generally organized as limited partnerships, that buy and restructure companies that are not publicly traded. Private equity is an asset class consisting of equity securities and debt in operating companies that are not publicly traded on a stock exchange.

A private equity investment will generally be made by a private equity firm, a venture capital firm or an angel investor. Each of these categories of investor has its own set of goals, preferences and investment strategies; however, all provide working capital to a target company to nurture expansion, new-product development, or restructuring of the company’s operations, management, or ownership.