What is private equity?

"Private equity" is the investment of an equity security that is private instead of public. These funds are either given directly to private companies or used to purchase public companies, which results in the company being delisted from the public exchange.

Private equity is often handled by private equity firms that pool together resources from multiple investors and use it towards a leveraged buyout to take over a public company. After the company is delisted, the firm works to improve the value of the company in order to either sell it or to launch an initial public offering, which puts the company back into a public position.