Private Equity


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Related to Private Equity: venture capital

Private Equity

Equity shares that are not traded on a public exchange.

Private Equity

1. Ownership in a corporation that is not publicly-traded. That is, private equity involves investing in privately held companies. Most of the time, private equity investors are institutional investors and high net-worth individuals who have a large amount of capital to commit to these investments. Private equity is usually held for a long period of time, and trading in it is useful when a company is in danger of bankruptcy, because it provides access to a great deal of capital very quickly.

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.

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.

References in periodicals archive ?
and abroad, private equity enabled a highly leveraged company to take advantage of a big growth opportunity, while helping the owner to cash out.
The emergence of the limited partnership as the dominant form of intermediary is a result of the extreme information asymmetries and potential incentive problems that arise in the private equity market.
a subsidiary, is one of a growing handful of African-American-run private equity funds.
Venture capital, provided at the formation of a company or during a period of rapid growth, is the riskiest form of private equity, due to the high failure rates of new companies.

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