What Private Equity Is
Private equity firms buy companies, often using borrowed money, try to make them more valuable and sell them years later. Here is how the business works, who invests and how big it has become.
Buy, improve, sell
A private equity firm raises a fund from investors, then buys controlling stakes in companies, usually mature businesses with steady cash flow. Over roughly three to seven years it tries to raise profits, pay down debt and sell the company for more than it paid, through a sale to another company, another fund or an IPO.
Private equity vs. venture capital
| Private equity | Venture capital | |
|---|---|---|
| Targets | Mature, profitable companies | Young, fast-growing startups |
| Stake | Usually full control | Minority stakes |
| Use of debt | Heavy | Little |
| Return driver | Cash flow, improvements, debt paydown | A few huge winners |
General differences; strategies overlap.
Who invests
Most private equity money comes from pension funds, endowments, insurers, sovereign wealth funds and wealthy families. Individuals increasingly get access through newer funds with lower minimums, and a 2025 executive order pushed to open 401(k) plans to private assets, though the related Labor Department rule was still only proposed as of September 2026.
Public shares of private equity firms
Several large firms are themselves public companies. In our price data, Blackstone fell about 33% and KKR about 34% over the year to Sept. 17, 2026, while Apollo fell about 12%. Their shares reflect fundraising, fees and how their investments are valued.
A real chart: Blackstone (BX) daily bars, Sept. 2025 to Sept. 2026. Past performance does not predict future results.
Key takeaways
- Private equity buys companies, improves them and sells them.
- It targets mature businesses and uses heavy debt.
- Most money comes from institutions.
- Some private equity firms are public companies you can buy.