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Related to Private Equity: venture capital
2. A company that trades in private equity. Often, private equity firms band together and buy out publicly-traded companies, making them privately held.
Private equity is an umbrella term for large amounts of money raised directly from accredited individuals and institutions and pooled in a fund that invests in a range of business ventures.
The attraction is the potential for substantial long-term gains. The fund is generally set up as a limited partnership, with a private equity firm as the general partner and the investors as limited partners.
Private equity firms typically charge substantial fees for participating in the partnership and tend to specialize in a particular type of investment.
For example, venture capital firms may purchase private companies, fuel their growth, and either sell them to other private investors or take them public. Corporate buyout firms buy troubled public firms, take them private, restructure them, and either sell them privately or take them public again.