Private Equity

In finance, private equity (PE) 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.

Bloomberg Businessweek has called private equity a rebranding of leveraged buyout firms after the 1980s. Among the most common investment strategies in private equity are: leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital.

Private equity is also often grouped into a broader category called private capital, generally used to describe capital supporting any long-term, illiquid investment strategy.

In the process of the transaction, PE will consider the exit mechanism in the future, namely through the company's initial public offering (IPO), mergers and acquisitions (M & A) or management buy-out (MBO) and other ways of profitable exit.