What is a private equity firm and how does it operate?

Jay

New member
I’m trying to understand what is a private equity firm in simple terms.
How do these firms make money, and what types of businesses do they invest in?
Is private equity different from venture capital?
 
A private equity firm is a money-raising firm used by investors to acquire, develop and eventually liquidate private enterprises. It works by buying companies and adding value through strategic and operational transformation and selling them out or through an IPO.
 
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