Next video:
Loading the player...

Private equity refers to company ownership by a specialized investment firm. Typically, a private equity firm will establish a fund and use it to buy multiple businesses, with the goal of selling each one within a few years at a profit.

Private equity firms will often target an underperforming business and, after purchasing the company, use their management expertise to improve profitability.

Related Articles
  1. Insurance

    A Primer On Private Equity

    Private equity investing is becoming more accessible for individual investors; find out how you can get involved.
  2. Managing Wealth

    How To Invest In Private Companies

    It can be tough to analyze a company that doesn't trade publicly, but there are several advantages.
  3. Financial Advisor

    Should My Portfolio Include Private Equity?

    Private equity offers a lot of potential, but is it worth the risk?
  4. Financial Advisor

    Is Private Equity the Right Move Now? (PSP, PEX)

    With equities extremely volatile, does it make sense to move to private equity?
  5. Small Business

    How To Invest In Private Companies

    Owning a private firm means sharing more directly in the underlying firm’s profits.
  6. Retirement

    Coming Soon: Private Equity In 401(k) Plans

    The day will soon come when private equity is commonly found among 401(k) plan investment options. Here's who's leading the charge and what to watch for.
  7. Financial Advisor

    Use Private Equity Strategy to Invest

    Forget trying to be a great trader. Learn to invest like private equity firms for superior results.
  8. Financial Advisor

    3 Tips For Finding a Job in Private Equity

    Understand how difficult it is to break into the field of private equity, and increase your chances by preparing early and following these tips.
  9. Investing

    Valuing Private Companies

    You may be familiar with publicly-traded companies, but how much do you know about privately-held firms?
  10. Investing

    Tax Wars: Private Equity Vs. Wall Street

    Private equity firms could encounter challenges with a proposal to change interest expense deductibility.
Hot Definitions
  1. Tax Liability

    The total amount of tax that an entity is legally obligated to pay to an authority as the result of the occurrence of a taxable ...
  2. Preferred Stock

    A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares ...
  3. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
  4. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  5. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center