In finance, private equity is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange.
A private equity investment will generally be made by a private equity firm, a venture capital firm or an angel investor. Each of these categories of investor has its own set of goals, preferences and investment strategies; however, all provide working capital to a target company to nurture expansion, new product development, or restructuring of the company’s operations, management, or ownership.
Bloomberg BusinessWeek has called private equity a rebranding of leveraged buyout firms after the 1980s. Among the most common investment strategies in private equity are: leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital. In a typical leveraged buyout transaction, a private equity firm buys majority control of an existing or mature firm. This is distinct from a venture capital or growth capital investment, in which the investors (typically venture capital firms or angel investors) invest in young or emerging companies, and rarely obtain majority control.
Private equity is also often grouped into a broader category called private capital, generally used to describe capital supporting any long-term, illiquid investment strategy.
Read more about Private Equity: Strategies, History and Development, Investments in Private Equity, Liquidity in The Private Equity Market, Private Equity Firms, Private Equity Funds, Recording Private Equity
Famous quotes containing the words private and/or equity:
“One key, one solution to the mysteries of the human condition, one solution to the old knots of fate, freedom, and foreknowledge, exists, the propounding, namely, of the double consciousness. A man must ride alternately on the horses of his private and public nature, as the equestrians in the circus throw themselves nimbly from horse to horse, or plant one foot on the back of one, and the other foot on the back of the other.”
—Ralph Waldo Emerson (1803–1882)
“If equity and human natural reason were allowed there would be no law, there would be no lawyers.”
—Christina Stead (1902–1983)