Private Equity

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Private Equity

Equity shares that are not traded on a public exchange.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
The Warwick University academic, who once worked with Gordon Brown, said: "Private equity firms shouldn't be ruled out.
GMB general secretary Paul Kenny told the union's annual conference in Brighton that private equity firms buy up companies, then strip them to the bone.
JPMorgan Private Equity Fund Services will provide middle and back office outsourcing of fund administration services such as fund and partnership accounting, tax support and comprehensive reporting services to private equity firms and limited partners.
So far, calls for imposing a longer holding period on hedge funds investing or buying German companies haven't gone far in spite of Eichel's warning that without such restrictions, international private equity firms and hedge funds could do with other German publicly listed companies what they have done with Deutsche Borse.
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While Chinese private equity firm, JD Capital and Ping An Insurance Company of China have made preliminary bids for the company among others, the processes involved could be time consuming.
The sale process, which will be held in the next few weeks, is expected to lure interest from other private equity firms, as well as trade buyers, the sources said, adding that Cinven was about to mandate an advisor to run the auction.
A Bloomberg ( report , drawing on information from anonymous sources, said the stores' owners, private equity firms TGP Capital and Warburg Pincus, filed for an initial public offering (IPO) in June.
The other two potential investors, private equity firms TStone and Vogo Fund, said they had dropped out of the race for the stake.

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