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Private Equity (PE)

Private Equity refers to shares of a company that represent ownership for non-publicly-traded companies. An individual who wants to take partial ownership of a company can make a private equity investment in that particular firm. These companies are not listed or traded on any stock exchange.

While PE refers to a type of equity ownership, you often see PE used to refer to firms that specialize in private equity transactions (PE Firms). These firms typically purchase all or part of a company which they then operate. By changing financing structures and reducing operational costs, PE Firms can often generate additional cash flow as well as increase the value of the companies they own in a future sale. Well-known PE firms in the B2B software space include Vista and Thoma Bravo.

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