What Is Private Equity (PE)?

Private Equity is a term which refers to any kind of equity investment in an asset that is not freely tradable on a public stock market. Investors can invest in private equity funds, and the money in these funds is used by private equity firms to invest in target companies. The private equity firms buy into companies, improve their value and then sell their stake for a profit.

PE firms usually control the management of the companies in which they invest and sometimes bring in new staff who have experience in the sector to focus on making the company for valuable.

There are different categories of private equity investment including:

  • Leveraged buyout
  • Growth capital
  • Angel investing
  • Mezzanine capital

Related Terms

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