What is a private equity fund?

So-called PE funds may also buy out public companies, take them private, and then restructure them for potential future growth. Another way to define private equity is as a form of financing where public or private companies accept investments from a PE fund.

Who invests in private equity?

The private equity industry comprises institutional investors, such as pension funds, and large private equity firms funded by accredited investors. A significant capital outlay is needed because private equity invests directly—often to gain influence or control over a company’s operations—so deep-pocket funds dominate the industry.

What is a private equity firm?

Private equity firms, commonly called PE firms, pool investor funds to invest in or acquire companies that are not publicly traded on a stock exchange. Typically, they take controlling stakes in these portfolio companies and work with management to improve the businesses and make them more profitable.