What is “Private Equity” meaning?

Private equity is a type of investment where funds or individuals invest directly into private companies or buy out public companies to take them private. The goal is usually to improve performance, restructure operations, or scale the business before selling it for a profit. It plays a significant role in venture capital, buyouts, and business transformation strategies.

Example

“A private equity firm acquired the struggling brand, overhauled its operations, and later exited with a 3x return.”

How is “Private Equity” used in business?

In business, private equity is used to finance high-potential ventures or to take over underperforming companies with the intention of turning them around. Investors often play an active role in management, ensuring that strategic changes lead to value creation. It's common in sectors such as tech, healthcare, and retail.

Pro Tip

If you're seeking private equity funding, ensure your business model shows potential for scalability, strong cash flow, and a clear exit path for investors.

Related Terms

Venture Capital, Buyout, Investment Strategy, Exit Strategy