One way to describe private equity is, simply put, privately-held money invested into privately-owned companies that are not listed on the stock market.
Investments could be your Uncle Jim’s $1M he put into your brother’s video gaming company. This is private, it is not listed on the public market where the shares can be bought and sold by anyone. This definition, however, omits the key difference that sets private equity far apart from alternate capital.
One of the leading private equity players, David Rubenstein of The Carlyle Group, gets to the nub. “Private equity is the effort made by individuals with a stake in a business.”[i] These individuals will put capital in, try to improve the business, make it grow, and, ultimately, sell their stake.
Jacoline Loewen is a partner with Loewen & Partners which has raised over $100M for owners of companies.
[i] Rubenstein’s definition sourced from the website www.bigthink.com/business-economics/6380>.