# Private equity

Concept · [Fundraising and equity](https://ecosystem.samcarlton.com/fundraising)

Also called: PE, PE firm, private equity firm, buyout firm

Investment firms that buy stakes in, or all of, established private companies, usually aiming to improve them and sell later at a [profit](https://ecosystem.samcarlton.com/profit). It differs from [venture capital](https://ecosystem.samcarlton.com/venture-capital), which backs young, fast-growing startups.

**For example:** A private equity firm buys a regional IT services company and merges it with two similar companies.

## Connects to (4)

- [Venture capital](https://ecosystem.samcarlton.com/venture-capital): Money that professional investment firms put into young companies in exchange for equity.
- [EBITDA](https://ecosystem.samcarlton.com/ebitda): Earnings before interest, taxes, depreciation and amortization.
- [Exit](https://ecosystem.samcarlton.com/exit): The moment when founders and investors can turn their shares into cash.
- [Limited partner](https://ecosystem.samcarlton.com/limited-partner): An investor who puts money into a venture fund.

> This glossary is plain-language orientation, not legal or financial advice. Before you decide on a company structure, a contract, taxes or a fundraising deal, talk with a lawyer or an accountant.

Map view: https://ecosystem.samcarlton.com/private-equity