DEFINITION OF 'Private Equity'
Private equity refers to investments made into companies that are not publically traded on a stock exchange.
The majority of private equity capital is raised from institutional investors and wealthy individuals who can commit large sums of money for a long period of time.
The money invested through private equity can be used to fund new technologies, expand working capital, make acquisitions (sometimes of publically traded companies that are then delisted), and strengthen a balance sheet.
Private equity is also used to turn around the fortunes of an underperforming company and can offer investors significant returns on their investment.