Profits, Controversies, and Exploring: What Is Private Equity?

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Private equity is one of the largest areas of the financial sector but remains largely a mystery to most. So, what is private equity, and how can it affect you and your finances?

What Is Private Equity?

What Is Private Equity? It usually involves buying ownership stakes in non-publicly-traded companies or buying public companies and taking them private.

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A private equity fund is typically an investment partnership between a private equity firm and a group of limited partners.

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These limited partners may include insurance companies, foundations, endowments, or other institutional or high-net-worth investors.

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Partners in a fund should expect to face limitations on withdrawing their investment before a requisite time window (usually several years) has passed.

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As privately orchestrated arrangements, these opportunities are generally unavailable to everyday retail investors. 

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However, ordinary investors may be exposed to private equity through employer-sponsored retirement plans like a 401(k) or 403(b).

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