Industry

Private Equity Industry

Financials

Private equity is stock in a company that is not offered for sale to the general public, held instead by specialized investment funds and limited partnerships that take an active role in managing and restructuring the businesses they invest in. Firms typically operate as a general partner raising capital from institutional limited partners, then combine equity and debt financing to acquire stakes in target companies with a view to an exit, commonly over a four to seven year horizon. The industry encompasses several strategies, including leveraged buyouts financed with significant debt, growth capital investments taking minority stakes in mature companies, venture capital funding for early-stage businesses, investment in distressed securities, and secondary purchases of existing fund interests.

Facts

Sector

Private investment 1

FAQs

Who regulates the firms that manage private equity funds in the United States?

Most private fund advisers have had to register with the Securities and Exchange Commission since the Dodd-Frank Act of 2010.

Advisers to private funds, the vehicles private equity firms use to invest, are overseen by the Securities and Exchange Commission. In the Dodd-Frank Act of 2010, Congress effectively required most private fund advisers to register with the Commission. Congress also gave the Commission specific new authorities under the Investment Advisers Act of 1940 to prohibit or restrict advisers' sales practices, conflicts and compensation schemes.

Connections