Private equity funds usually take a majority or significant minority stake, contribute actively to the company's management and strategy, and exit within a few years through a sale or IPO. Extensive due diligence is carried out before investing.
Related terms
Venture capitalEquity investment in early-stage companies with high growth potential.Financial due diligenceA detailed review of the target company's financial position, profitability, indebtedness and risks before an acquisition or investment.LeverageThe extent to which a company uses debt to finance its assets or investments.Completion accountsFinancial statements prepared as at the closing date of an acquisition, through which the final price is set by net debt and working capital adjustments.Cost of capitalThe minimum rate of return investors expect from an investment in return for the risk they take.Discounted cash flow (DCF)A valuation method based on discounting the free cash flows an asset or company will generate in the future to the present using an appropriate discount rate.
Last updated: October 22, 2026 · This definition is for general information only.