Private equity involves investing in privately-held companies or acquiring public companies and taking them private through buyouts. Investors pool funds to acquire equity stakes, aiming to enhance the company’s value over several years through strategic management and operational improvements.
Private equity firms actively participate in the companies they invest in, often implementing changes like restructuring, market expansion or M&A to drive growth and profitability.
These investments typically have higher risks due to longer investment horizons and illiquidity but offer potential for significant returns upon exit, usually through methods like initial public offerings (IPOs) or sales to other companies.
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