Private equity (PE) is a form of alternative investment in which specialized firms invest directly in privately held companies—or acquire public companies to take them private—with the goal of increasing their value and generating long‑term returns. Private equity firms raise capital from institutional investors, pension funds, endowments, and high‑net‑worth individuals, then deploy that capital through strategies such as leveraged buyouts (LBOs), growth equity, and distressed investing.
Private equity investments are typically illiquid, long‑term (often 5–10+ years), and focused on active management, including operational improvements, restructuring, strategic expansion, and leadership changes. PE firms aim to enhance a company’s performance and ultimately exit through a sale, secondary buyout, or initial public offering (IPO).