Glossary
Private equity
Private equity is investment in companies that are not traded on a public stock exchange. Investors take an ownership stake in a private business, aiming to grow its value over a holding period. Most private equity is organised as time-limited funds that buy, improve, and eventually sell the companies they own.
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Private equity covers the ownership of businesses that are not listed on a public market. An investor acquires a stake in a private company, works to improve it, and expects that stake to be worth more over time. The classic model uses a fund: outside investors commit money for a set period, the fund buys a portfolio of companies, and it returns the proceeds when those companies are sold, usually within a decade. This structure has funded a great deal of growth, but the fund clock also shapes it, since every company is bought with an eventual sale in mind.
A holding company sits at the opposite end of this spectrum. It owns businesses with its own capital and no fund deadline, so ownership can be indefinite rather than timed to an exit. Understanding conventional private equity is the clearest way to see what a permanent-capital owner does differently.