Private Equity Firms Definition

A private equity firm is an investment firm that provides capital to companies in the form of equity. Private equity firms typically invest in companies that are not publicly traded, and they often take an active role in the management of their portfolio companies.

The goal of a private equity firm is to generate a return on its investment through a variety of means, including dividends, share price appreciation, and the eventual sale of the company. Private equity firms typically have a longer time horizon than other types of investors, such as hedge funds, and they often seek to control a majority stake in their portfolio companies.

Private equity firms have been criticized for their high fees, which can eat into the returns generated by their portfolio companies. Additionally, private equity firms have come under fire for loading their portfolio companies with debt and engaging in aggressive accounting practices.