How does private equity differ from public equity and debt?

Private equity differs from public equity and debt in several ways. Public equity refers to the shares of a company that are traded on a public stock exchange, while private equity involves investing in private companies that are not publicly traded. Debt refers to loans that are provided to companies or individuals, which are paid back with interest over time.

Private equity firms typically invest in private companies by buying a controlling stake or a significant minority stake in the company. This allows them to work closely with the company's management team to improve the business operations and increase its value over time. Private equity firms often take an active role in managing the companies they invest in, which is different from public equity investors who typically do not have the same level of involvement.

Private equity firms also differ from debt investors in that they typically invest in companies that have the potential for high growth and returns. This means that private equity investments can be riskier than debt investments, but they also have the potential for higher returns. In addition, private equity firms often use leverage to finance their investments, which can amplify returns but also increase risk.