Private Equity

Private equity involves investment in private companies or buying out publicly traded companies to take them private. These investments are typically made through private equity firms, which raise funds from institutional investors and high-net-worth individuals to invest in companies with growth potential or restructuring opportunities. Private equity firms aim to improve the company's profitability and sell it at a higher valuation, often through a merger, acquisition, or initial public offering (IPO).

Example

A private equity firm acquires a struggling manufacturing company, restructures its operations to improve efficiency, and later sells the company for a profit.