Search
Showing results for “Private Equity”
Jump to a topic
Private EquityPrivate equity firms typically purchase mature businesses with the aim of exiting at a profit by reselling them or taking them public. When a private equity firm buys a company, it takes full or majority control of the business, influencing its finances and operations to eliminate inefficiencies, grow revenues, expand into new products and markets, acquire complementary businesses, and more.
Private equity investments are typically reserved for institutional investors such as sovereign wealth funds, university endowments, pensions, and high-net-worth individuals. For these investors, PE is a valuable diversification strategy that can yield hefty returns. Private equity is considered an alternative investment—it's less liquid than traditional assets like stocks and bonds.
Private equity firms often borrow heavily to finance acquisitions, using the target company's assets as collateral to minimize the firm's upfront investment and risk while maximizing potential returns. They operate under a "two and twenty" structure, in which the firm's investors (or "limited partners") pay its roughly 2% annual management fee while the fund's managers take 20% of the fund's overall profits (called "carried interest"), with the rest going to investors.
Despite nearly 20 years of strong returns, private equity fundraising decreased in 2025 and 2024. In 2025, global private equity raised $408B, down 33% from the $609B raised in 2024.Explore Private Equity
What we've found
Private credit and private equity are both alternative assetsLike private equity fund managers, private credit managers typically raise funds directly from investors, lending to corporations. The borrowers can benefit from the lack of middlemen and resulting efficiency, and the lenders often yield comparatively higher returns. BlackstoneIn 2024, US private equity posted an 8.1% returnTracked 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. Cambridge AssociatesPrivate equity IRR is the internal rate of return on a PE investment or fundIt's typically expressed as an annualized percentage that incorporates both the size and timing of cash flows between investors and the fund. It's the discount rate that makes the net present value of all cash flows equal zero. Many private equity funds target a net IRR in the mid‑teens to low‑20s percent range, with an 8% "hurdle" or preferred return as a minimum before carried interest or "carry" is paid. Cambridge AssociatesSome institutional investors are growing wary of private equity, as certain investments underperform traditional market indicesPrivate 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. Center for Economic and Policy ResearchPrivate equity companies are selling off more acquisitions—but at much lower pricesIn 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. CNBCPrivate equity firms can be 'powerful partners' or 'formidable competitors'Under the best circumstances, PE firms can increase a company's value using strategies that might not be suitable for public companies facing pressure for immediate shareholder returns. But PE firms are often portrayed negatively due to the aggressive strategies they sometimes use to cut inefficiencies. As PE has grown, many firms have changed their strategies, shifting away from aggressive scaling to more integrated acquisitions. Wharton MagazineExplore the differences between private equity, venture capital, and hedge fundsPrivate equity firms focus on buying and improving private companies with the intent to sell them for profit or take them public. Venture capital is technically a form of private equity in which investors focus on startups and generally don't seek majority control of the company. Hedge funds are pooled investments for sophisticated investors that pursue a wide range of often complex strategies. HarvardFormer US Senator Mitt Romney cofounded a revolutionary private equity firmMitt Romney cofounded Bain Capital—a private investment group that manages more than $215B—in the 1980s before becoming a politician. Bain Capital is credited with revolutionizing private equity by focusing on consolidating and streamlining business operations rather than relying on financial engineering to increase company profits. ForbesMany politicians join private equity firms after leaving WashingtonBoth 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. ForbesPrivate equity deals sometimes come with layoffsTo 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. YouTubePrivate equity's expansion into healthcare has been criticized for raising patient medical costsBetween 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. The Wall Street JournalThe first private equity fund was launched in 1960At the time, the industry—and the public's understanding of it—was rather limited, and few private equity firms existed until the 1980s. The first leveraged buyout is thought to have taken place in 1955. PitchbookA private equity firm led the leveraged buyout of Toys 'R' Us before the company's bankruptcyAfter being acquired by two private equity firms and a real estate company for more than $6B in 2005, Toys 'R' Us filed for bankruptcy in 2017. Many point to the $400M a year the company had to pay to service its debt, as well as increased competition from online retailers like Amazon, for draining its profits and ultimately dragging it under. In These TimesNearly half of billionaires plan to increase exposure to direct private equity investments in 2026In a global survey administered by the Union Bank of Switzerland (UBS), 49% of billionaires plan to continue investing in companies by providing direct access to capital. However, only 37% of billionaires plan to increase their investments in private equity funds. Visual CapitalistThe majority of capital in private equity funds is provided by institutional investorsThe 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. Moayyad LawInvesting 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.) Business InsiderThe 'Two and Twenty' structure allows hedge funds and private equity firms to earn significant returnsWith this structure, firms charge limited partners or "LPs" a 2% management fee for overseeing the fund (assets under management or AUM) and take 20% of the fund's overall profits (carried interest). Many private credit funds also operate under this structure. Corporate Finance InstituteCheap debt and relatively minimal regulation fueled private equity's expansionLow 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. SpotifySee a database of large companies owned by private equity firmsThe Private Equity Stakeholder Project tracked more than 200 companies owned by private equity with more than 7,000 employees. Companies on the list include J. Crew, Jersey Mike's Subs, Barnes and Noble, Panera Bread, and Tropical Smoothie Cafe. PE StakeholderPrivate equity firms often use leveraged buyouts to acquire new companiesIn 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. InvestopediaKohlberg Kravis Roberts was the world's largest private equity firm as of 2025Headquartered 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. Visual CapitalistThe funeral home industry is increasingly consolidating via private equity firmsA growing share of the funeral home industry is being acquired by private equity-backed firms. A 2022 article states that about 20% of this $23B business is owned by funeral home chains, and private equity-backed firms own about a quarter of those. KFF Health NewsPrivate equity is viewed as an alternative investmentThese different types of private equity include venture capital, growth equity, and buyouts. Business Insights BlogApollo Global Management and Blackstone are among the world's top 20 private credit fund managersWhile Blackstone is the world's largest alternative asset manager, Apollo Global Management is a large private equity firm. Apollo had $480B in private credit assets under management as of January 2025. S&P GlobalPrivate credit is a nonbank loan made directly to a businessSimilar to private equity, private credit is part of the private markets world. Both strategies offer illiquid, privately negotiated investments for privately held companies. Unlike private equity investors, however, private credit investors typically do not take ownership stakes in the companies they invest in. InvestopediaPrivate companies are often harder to value than public companiesThat'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. InvestopediaThe 'ultrawealthy' in 2026 hold $30M or moreThis group of ultra-high-net-worth individuals holds more than double the assets of the top 1% of Americans (and this group holds over a third of all American wealth). These folks go beyond a well-funded retirement plan and a paid-off home common to middle-class households with investments in private equity, commercial real estate, and alternative assets like art. GOBankingRatesFamily Dollar and Dollar Tree merged in 2015 before splitting in 2025Dollar Tree completed its acquisition of Family Dollar for about $9B in 2015. However, in 2025, Dollar Tree sold Family Dollar to private equity firms Brigade Capital Management and Macellum Capital Management for just over $1B after Family Dollar lagged in performance. SpotifyPension funds' allocations to risky, alternative investments increased by 25% between 2001 and 2021The portion of pension funds' risky investments, including alternative investments such as private equity, increased from 14% in 2001 to 39% in 2021. Analysts say private equity investments have delivered higher returns than traditional assets like stocks and bonds. Increased investment in private equity has also given pensions a way to recover from the 2008 financial crisis without necessarily investing more money. StanfordIn 2024, attorneys spent an estimated $541M on outdoor adsA $70M increase from 2023, this marketing tactic helps lawyers bring attention to their names in an oversaturated market. Read this article to find out why lawyers advertise on so many billboards. Hustle OriginalsThe pedigree of one’s MBA program matters a lot to elite employersOne expert even said that having an MBA from a prestigious school is “non-negotiable” for certain employers, such as elite management consulting, investment banking, and private equity. FortunePrivate mortgage insurance protects the lender rather than the borrowerAlso known as a “PMI,” private mortgage insurance may be required for those who have a conventional loan and put less than 20% down on their home. A PMI could also be required for someone refinancing their mortgage if they have less than 20% equity remaining in the property. CBS News71% of equity investments in Q1 2025 went to AI companiesThat's up from just 14% in 2020, according to JPMorgan, which recently conducted an analysis of venture capital investment trends in the US. Visual CapitalistAngel investors typically fund a startup at an earlier stage than venture capitalistsAngel investors and venture capitalists both invest in startups, but they differ in a few key ways. Angel investors typically invest earlier and in a smaller amount. Encyclopedia BritannicaFamily offices have been increasing their allocations to private creditPrivate firms that manage family fortunes have been investing more in alternatives like venture capital and real estate, impacting the wider financial world. CNBCAlternative investments can be sorted into seven major categories, according to some expertsThese categories include real estate, private equity, private debt, hedge funds, collectibles, and more. Business Insights BlogHooters filed for bankruptcy in March 2025 after being operated by two very distinct operationsFor years before that filing, the restaurant group had been operated by two different companies: one owned by private equity, and the other that includes the original founders. The Wall Street JournalHow stock exchanges like Chicago Mercantile act as trading refereesAs opposed to New York's stock exchange, Chicago's Mercantile exchange emphasizes futures contracts on commodities. This podcast episode breaks down how exchanges actually work, make money, and streamline the market. Business BreakdownsHow ‘vulture’ hedge funds make moneySome hedge funds specialize in snapping up distressed assets, like failing newspaper chains, and further stripping down their operational expenses in a bid to make a profit from the initial capital outlay. Delve into how one secretive firm known for the practice operates—and what’s at stake for the broader economy. Vanity FairHow Ivy Leagues are worth billionsIvy League universities manage massive endowments to support their operations—but instead of simply spending donations, they invest them for long-term growth. Yale’s David Swensen helped reshape this approach in the 1980s by diversifying beyond stocks and bonds into private equity, hedge funds, and real estate. 1440Becoming an Olympic swimmer costs tens of thousands of dollarsWhen you see Olympic athletes win gold, it's the culmination of years of hard work and discipline. But it isn't all sweat equity. Before ever stepping foot on the world stage, these athletes have to pay or find funding for private coaching and lessons, club memberships, and meet fees, with estimates that it costs $25K to $40K to make it to the Olympics. Wall Street Journal
Try another search?