How is private equity different from other forms of investment?

Private equity is different from other forms of investment in several ways.

Firstly, private equity investments are typically made in companies that are not publicly traded, meaning that they are not available to be bought and sold on a stock exchange. In contrast, public equity investments are made in companies that are publicly traded and available to be bought and sold by anyone.

Secondly, private equity investments are typically made with the goal of acquiring a significant ownership stake in the company, often a controlling interest. This allows the private equity firm to have a greater degree of control over the company’s operations and strategy, compared to public equity investments where the investor typically has little to no control over the company.

Thirdly, private equity investments often involve a longer holding period than public equity investments. Private equity firms typically hold their investments for several years before selling them, whereas public equity investors can buy and sell their investments much more frequently.

Lastly, private equity investments are typically made with the goal of generating high returns for the investors, often through operational improvements, strategic initiatives, or financial engineering. In contrast, other forms of investment such as fixedincome securities or mutual funds may be more focused on generating steady income or preserving capital.