This umbrella term for essentially private investment covers two main activities..
First off young fast growing firms can struggle to attract finance for expansion from traditional sources such as banks and may be too small to approach the public via a listing on an exchange. Private equity firms often specialise in providing the venture capital these young firms need, usually in return for an equity stake (which they will hope to sell in the future) and perhaps board representation. Other types of private equity firm specialise in buying public firms that are struggling, taking them into private hands, reorganising them and relisting them at a profit. Many private equity firms are privately owned partnerships although they may also be listed firms in their own right.