A private equity company is an investment firm that raises money from investors to buy stakes in companies and help them grow. This is different from individual investors who invest in publicly traded companies. This can keep your deals moving via the best data room service be a source of dividends but has no direct effect on the company’s decisions and operations. Private equity companies invest in groups of companies, referred to as portfolios, and seek to take control of these businesses.

They will often buy a company that has room to improve, and make changes to increase efficiency, cut expenses, and expand the business. Private equity firms could utilize debt to purchase and take over a company, a process known as a leveraged purchase. They then sell the company for a profit and take management fees from the companies that are part of their portfolio.

This cycle of selling, buying, and improving can be time-consuming for smaller companies. Many are looking for alternative financing methods that let them access working capital without the added burden of a PE company’s management fees.

Private equity firms have been able to fight against stereotypes that paint them as thieves of corporate assets, stressing their management skills and demonstrating examples of successful transformations of their portfolio companies. But some critics, including U.S. Senator Elizabeth Warren, argue that the focus of private equity on making quick profits is detrimental to the long-term value and causes harm to workers.