Captivating Profits, Controversial Practices, and Corporate Plundering: What Is Private Equity?
Private equity is one of the largest areas of the financial sector but remains largely a mystery to most. Since the average retail investor generally doesn’t have direct access to private equity funds, they become a black box. So, what is private equity, and how can it affect you and your finances? Unless you’re a long-term professional or institutional investor, you most likely won’t interact directly with a private equity firm in your financial dealings. However, these firms are major players in the financial world and may still impact your investment portfolio in a handful of ways. Let’s dive into private equity to see what it is, how it works, and its different effects on investors and the economy. What Is Private Equity? Private equity is a channel of business and investing that exists as an alternative to dealing directly in publicly traded securities, such as buying stocks and bonds on a public exchange. It usually involves buying ownership stakes in non-publicly-traded co