Private equity firms can be 'powerful partners' or 'formidable competitors'

Private equity deals sometimes come with layoffs

To increase profits, private equity firms often try to streamline and consolidate operations within the companies they acquire as much as possible. They also often alter company business models, expanding into new product offerings and markets that could necessitate team changes.

Private equity firms often use leveraged buyouts to acquire new companies

In a leveraged buyout or "LBO," private equity funds finance acquisitions with debt secured by the target company's assets and cash flows. The PE firm aims to improve operations and leverage the company's profile to pay down debt, thereby increasing equity value.

Private equity's expansion into healthcare has been criticized for raising patient medical costs

Between 2000 and 2018, PE's total investment in healthcare ballooned from $5B to $100B. While healthcare systems originally began consolidating as a solution to navigating complex regulations (and to make working with insurance companies easier), research suggests that private equity has both increased patient costs and decreased the quality of care in hospitals and doctors' offices.

Some institutional investors are growing wary of private equity, as certain investments underperform traditional market indices

Private equity often attracts investors who can afford to tie up capital for long periods of time in exchange for higher returns than traditional investments. For many years, private equity at least tracked with the S&P 500 in terms of returns to investors, but in 2024 and 2025, it underperformed and posted declining returns.

Private equity is viewed as an alternative investment

These different types of private equity include venture capital, growth equity, and buyouts.

The majority of capital in private equity funds is provided by institutional investors

The individuals who invest this initial capital are called the firm's limited partners. Private equity firm LPs include sovereign wealth funds, university endowments, high-net-worth individuals, and more.

Should companies be owned by their workers?

In the last half-century, so-called private equity has transformed industries by purchasing private companies, cutting costs, loading up debt, and then selling the business at a premium—all at a huge profit to the investors. Workers, on the other hand, are often left with nothing. Listen to how both pro-worker economists and a private equity stalwart are trying to shift ownership to workers—a growing tactic proven to improve worker satisfaction and company value.

Cheap debt and relatively minimal regulation fueled private equity's expansion

Low interest rates in the 2010s made taking on debt cheap, making leveraged buyouts incredibly lucrative. Private equity firms were able to make large deals quickly, in part because they don't face the same disclosure requirements and shareholder approval processes as public companies. These two factors juiced the growth of private funds.

Private equity companies are selling off more acquisitions—but at much lower prices

In 2025, private equity exits were up by 5.4%, but the total value of those deals was down by 21.2% year-over-year. An exit occurs when a private equity firm either sells an acquired company or takes that company public.

Investing in private equity is typically reserved for 'accredited investors'

Limiting PE to accredited investors helps protect less experienced investors from large and risky investments. Accredited investors must meet requirements set by the Securities and Exchange Commission—they're typically required to have a net worth exceeding $1M, for instance. (Some users may experience a paywall.)

In 2024, US private equity posted an 8.1% return

Tracked by Cambridge Associates, 2024 performance saw limited partner distributions overtake contributions for the first time in years. Cambridge Associates, a leader in the space, typically uses a 2.0x+ MOIC (Multiple on Invested Capital) as a benchmark for top-quartile PE fund success.

Private companies are often harder to value than public companies

That's partly because there isn't readily available stock information, and financial accounting is kept behind closed doors. Typically, determining the value of a private company involves, among other things, closely comparing the private company with its competitors.

Between 2016 and 2023, PE spent more than $200B buying British companies

Between the COVID-19 pandemic and the United Kingdom's official departure from the European Union, the UK's economy struggled to recover. This economic strife led to British companies receiving steadily lower valuations than American companies, prompting a huge increase in PE investment. However, interest rates began increasing in 2022, putting pressure on the numerous leveraged buyout deals that took place between 2020 and 2021.

Legendary venture capitalist Peter Thiel once wrote that 'competition is for losers'

With Peter Thiel's "Monopoly Theory," the Founders Fund partner argued that investing in companies that create new categories, rather than those that compete with other businesses in existing ones, is a best practice in venture capital.

Activist investors use large ownership positions to influence companies

By holding large ownership positions, which often come with leveraged access to a company's board or the ability to force a shareholder vote, activist shareholders can change a company's corporate governance, leadership, and overall direction. Critics argue that activist shareholders hurt companies in the long term by prioritizing short-term higher shareholder returns over sustainability and growth efforts.

Kohlberg Kravis Roberts was the world's largest private equity firm as of 2025

Headquartered in New York City, KKR raised more than $117B between 2020 and 2024. KKR is credited for pioneering the leveraged buyout strategy for private equity in the 1970s and now owns nearly 300 companies.

Many politicians join private equity firms after leaving Washington

Both Democrats and Republicans have a history of leaving politics to work in private equity, raising concerns about the government's protection of private equity firms.

80% of a VC firm's returns come from 20% of the deals, per VC's 'power law'

Early-stage startups are highly risky investments. Many companies in a VC portfolio will not provide any significant return.

SPACs, explained

Special purpose acquisition companies make it easy for mature unicorns (companies valued at over $1B) to receive growth capital by going public. This process effectively skips the work of a traditional initial public offering, and its time-intensive investor negotiations. Typically, a well-known investor with expertise in a certain industry sponsors a SPAC with the intent to acquire a startup. Learn how it works and the risks involved here.

Going public has pros and cons for a company

An organization transfers ownership over to new shareholders—who could be anyone—following its IPO date. However, going public expands a company’s ability to increase funding and grow its business. This guide dives into the advantages and disadvantages of going public, and what those pros and cons can mean for investors.

The 'Big Three' and 'Big Four' consulting firms have grown more similar in recent years

The “Big Three” consulting firms—McKinsey & Company, Boston Consulting Group, and Bain & Company—and the “Big Four”—Deloitte, PricewaterhouseCoopers (PwC), KPMG, and EY—actually have a lot in common these days. But it wasn’t always that way.

Venture capital is a form of funding provided to early-stage companies with high growth potential, typically in exchange for an equity (or ownership) stake

Hedge funds, the private investment firms that trade a wide swath of financial assets, make money by imposing steep fees on investors and from the fund's investment performance.

Palantir's services allow both companies and the government to analyze complex data

There's a common misconception that Palantir buys, sells, and shares data, but Palantir insists it isn't a data broker. Rather, Palantir is more like a data analytics company that allows corporations and government agencies to combine messy, large, and often hard to access datasets to gather insights.

Peloton's founder once said the company 'sells happiness' before a disappointing initial public offering

Ahead of the company's IPO, Peloton founder John Foley told investors that "on the most basic level, Peloton sells happiness." However, the inspirational sentiment didn't stick with investors—the company closed the day of its IPO with stocks trading down 11% from the IPO price. (Some users may experience a paywall.)

Learn how to read a prospectus, the juicy document that any company must file with the SEC before going public.

Retail investors are not professionals—they invest their own money

For retail investors, the stakes may seem higher and more personal. Critics say that this dynamic means that retail investors are more susceptible to behavioral biases that could lead them to make poor decisions when it comes to buying and selling assets. For instance, fear of missing out could cause a retail investor to buy a stock that is popular but not a financially worthy investment.

Utility companies are often considered 'natural' monopolies

Natural monopolies occur in industries where the upfront costs of entering the market are high, making competition unrealistic. Investor-owned power companies, like Duke Energy, often have natural monopolies, as building alternative power grids and transmission lines is too expensive and impractical for competitors.

In 2025, four executives from large tech companies were given positions in the US Army Reserves—including Palantir Chief Technology Officer Shyam Sankar, which reinforced Palantir's ties with the US military and its role as a leading defense partner.

Warren Buffett's former professor Benjamin Graham is known as the 'father of value investing,' a strategy in which investors seek to buy stocks trading below their intrinsic worth.

Dozens of S&P 500 stocks, including Coca-Cola and Walmart—known as the dividend aristocrats—have increased dividends every year for 25 years

The power and influence of the American presidency have expanded significantly over time—far beyond what the founders envisioned.

How Amazon operates a 'flywheel' business model, a self-reinforcing cycle that drives continuous growth

A Yale student wrote a profound essay about the consulting industry's influence on elite college students that was published in a book of her writing after she died in a post-graduation car accident.

Gerrymandering works through two techniques: cracking opposing voters across districts to dilute their power, and packing them into a few to waste their votes in lopsided majorities.

American short story writer Flannery O'Connor raised 40 peacocks, which became potent symbols for her fiction's elegant violence

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Doctors differentiate between a phobia and fear by asking patients whether their fear interferes with their day-to-day activities.

Larger animals like giraffes, elephants, and blue whales have developed a unique defense against cancer, a phenomenon known as Peto's Paradox

Telehealth demand for GLP-1s for weight loss is booming as consumers seek easier access.

Some renewable energy sources may weaken the resiliency of electric grids by removing outage buffers provided by coal- and natural gas-fired plants, which provide the system with more time to find a new power source if a plant goes down.

Fast-casual restaurant Chili's is experiencing a resurgence, with its parent company recently reporting a nearly 32% increase in sales, thanks to passionate Gen Z fans on TikTok.

Massive 3D printers have been used to build homes by stacking layers of 'concrete toothpaste,' a fire-resistant material that effectively insulates against outside noise.

SpongeBob exemplifies Aristotle's philosophy for living well because he understands that happiness doesn't come from external factors like money, recognition, or power.

While atoms are normally made of protons, neutrons, and electrons, exotic ones have been built with antimatter—alternate versions of normal matter that live for fractions of a second and are about a billion times as rare.

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The Beatles' US label rejected the band's first two singles, 'Please Please Me' and 'From Me to You,' with one executive calling the band 'dead in the water.'

Use this tool to calculate the dollar value of your parental mental load, from meal planning to coordinating after-school care, then see resources that help generate solutions.

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