Private Equity Law and Legal Definition

Private Equity is a source of investment capital from wealthy individuals and institutions for the purpose of investing and acquiring equity ownership in companies. It is a type of investment in some asset in companies that are not publicly traded on a stock exchange. This type of investment is aimed at gaining significant, or even complete, control of a company in the hopes of earning a high return. The investments are made directly into private companies or there can be buyouts of public companies that result in a delisting of public equity. Generally, shares issued are proportional to the amount of the investment so that the person who has invested the majority of the money in effect controls the company.