Private equity means equity capital that is not quoted in the public exchange. Private equity firm is an investor manager that makes investment directly into private companies and conduct buyouts of the public companies resulting in delisting of the public equity. Private equity firms raise money from external financial institutional by getting capital commitments from them.

Private equity firms use such funds to buy controlling shares in mature ?rms through leveraged buyouts (LBOs), impose changes in ?rm operations or incentives, and eventually sell their shares to other ?rms or to public shareholders after some period, often several years or more.