An asset or equity in a private functioning firm whose stock is not available for public merchandising in a stock exchange is called private equity. The funding or money which is used for such investing is also called private equity. Some of these investments could be unreliable though with adequate investment management the investors could manage to obtain high returns. The investments could be made in established firms who may be searching for a sellout or are going through a suffering period or in startups and entrepreneurs who are looking to get funding to launch their thoughts.
A private equity company typically does investment management for its members. The firm raises finances and makes investments in functioning companies, public as well as nonpublic, through investment strategies such as leverage buyouts, growth capital, venture capital, mezzanine capital, and co-investment. In most cases the firms get funding from pension funds, banks, and financial institutions, though at times wealthy individuals looking for private investment opportunities may also provide funding.
One familiar form of investment involves the private equity firm buying out or holding majority control of a public company using leveraged buyout and then taking over the companys management for a short period. For that time, the firm's stocks are withdrawn from the public stock market so that the firm's management and other process could be reconstituted or reformed. The privatization gives the company freedom to act since it makes it responsible only to its investors. The firm could then make strong and drastic alterations to the senior management and could improvise the firm's system of management.
After these changes have brought results and the companys equity has extended, the equity is sold at a higher price.
A private equity company could also invest in startups. If so, the firm does not take over the startups majority control. Alternatively the firm plays the role of financial backer and nothing else. The investors would get an idea of the status of the equity from the response and reports that the firms generally send to the investors. Certain global firms have assets in over hundred companies and enjoy a good position in all major markets of the world. Such firms offer their investors private investment opportunities in diverse areas.
If you are on the lookout for funds or for good opportunities for investment, you should check out http://friendvestment.com. The website posts startups and hot entrepreneur ideas if you pay a small fee. The entrepreneurs can use http://friendvestment.com to find investors, while investors and private equity firms could find good startups through the website.