Private equity refers to investment funds, often organized as limited partnerships, that invest directly in private companies or engage in buyouts of public companies, resulting in their delisting from public stock exchanges. Unlike public equity investments, which involve buying shares of companies traded on public markets, private equity involves investing directly in businesses, either to gain control or to fund growth. These investments are typically characterized by a longer investment horizon, with the aim of generating substantial returns through strategic management improvements, operational efficiencies, or restructuring. Private equity firms raise capital from institutional investors and high-net-worth individuals, using these funds to acquire or invest in companies. The goal is to enhance the value of these companies over time and eventually exit the investment through a sale, public offering, or other liquidity event, aiming to achieve high returns for their investors.
