Private equity is an investment strategy that involves purchasing and managing equity ownership in private companies. These investments are typically made by private equity firms, which raise capital from institutional investors and high-net-worth individuals to acquire stakes in companies that are not listed on public stock exchanges.
The primary objective of private equity is to enhance the value of these companies over time through strategic management, operational improvements, and financial restructuring, ultimately aiming to sell the companies at a profit. This type of investment can span various stages of a company's lifecycle, from startup financing (venture capital) to buyouts of established businesses, offering investors the potential for substantial returns while also carrying higher risks due to the illiquid nature of these investments.
