What is Private Equity?

The private equity industry grows businesses, supports local jobs, and improves communities across all fifty states. At the same time, the industry delivers the highest long-term returns to investors and supports a secure retirement for teachers, firefighters, and other public servants.

Private equity invests capital in companies that are perceived to have growth potential and then works with these companies to expand or turnaround the business. This capital is contributed by large institutional investors and is organized into a fund. After three to seven years of ownership and working with the company, the fund manager will seek to “exit” the company by taking the business public or selling it for a higher valuation than it was purchased. This exit distributes profits from the sale (“returns”) to the investors in the fund and the fund manager. At the end of this process, private equity investments usually result in better jobs, stronger companies, and healthier communities.

Private equity firms…

  • Invest in Companies — Make annual investments of hundreds of billions of dollars in thousands of companies to make improvements and promote growth.
  • Improve Communities — Work to grow or turn around businesses and ultimately improve communities across America.
  • Create Jobs — Support millions of American workers in all industrial sectors.
  • Strengthen Retirements — Provide the highest long-term returns, net of fees, to pension funds, endowments, and other institutional investors.