Private equity refers to investment funds that buy and restructure companies that are not publicly traded. These investments are typically made by private equity firms, which raise capital from institutional investors and high-net-worth individuals to acquire stakes in private companies or take public companies private.

Characteristics
– Investment Horizon: Private equity investments usually have a longer-term focus, often ranging from 4 to 7 years or more.
– Active Management: Private equity firms often take an active role in managing the companies they invest in, aiming to improve operations and increase value.
– Leverage: Many private equity deals involve significant use of debt financing to enhance returns on equity.
– Exit Strategies: Private equity firms typically plan an exit strategy, which may include selling the company, taking it public, or merging it with another business.

Examples
– Leveraged Buyouts (LBOs): A private equity firm acquires a company using a combination of equity and borrowed funds, aiming to improve its performance and sell it for a profit.
– Venture Capital: A subset of private equity that focuses on investing in early-stage companies with high growth potential, often in technology or biotech sectors.
– Growth Capital: Investments made in more mature companies that need capital to expand or restructure operations, often without taking control of the business.