Finance
What is Private equity?
Private equity is investing directly in private companies — or buying public ones to take them private. Private equity firms pool investor money to acquire, improve, and later sell businesses at a profit, often using significant borrowed money.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains private equity.
Key things to understand
- 1It's investing in private (non-public) companies.
- 2Firms pool money to buy and improve businesses.
- 3They aim to sell later at a higher value.
- 4Deals often use heavy borrowing (leverage).
Frequently asked questions
- What is private equity?
- Investment in private companies by firms that buy, improve, and later sell businesses for profit.
- How is private equity different from venture capital?
- VC funds young startups; private equity usually buys mature companies, often entirely.
- How do private equity firms make money?
- By improving the companies they buy and selling them later at a higher value, plus management fees.