Private equity facts for kids

Diagram of the structure of a generic private equity fund

Private equity is investment in shares outside a stock exchange.

Investors, often from institutions like funds, give a company money, and in turn buy part of that company. The most common types of private equity are: leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital.

In leveraged buyouts, investors buy the majority control of a mature company. In venture capital or growth capital investment, investors give money to start-up companies.

Images for kids

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  Diagram of the basic structure of a generic leveraged buyout transaction

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  Diagram of a simple secondary market transfer of a limited partnership fund interest. The buyer exchanges a single cash payment to the seller for both the investments in the fund plus any unfunded commitments to the fund.

See also

In Spanish: Capital inversión para niños