Private equity firms invest in companies that are not listed publicly, and then work to grow or turn them around. Private equity firms usually raise funds through an investment fund with an established structure and distribution system and invest that capital into their targets companies. Limited Partners are the investors in the fund. Meanwhile, the private equity firm is the General Partner responsible for purchasing, selling, and managing the targets.

PE firms are often accused of being ruthless in their pursuit of profits however, they usually have an extensive management background that allows them to increase the value of portfolio companies through operations and other support functions. They can, for example, guide a new executive team by providing the best practices for financial strategy and corporate strategy and assist in the implementation of streamlined IT, accounting, and procurement systems to lower costs. They can also increase revenues and discover operational efficiencies, which can help them improve the value of their assets.

Private equity funds require millions of dollars to invest and it can take them years to sell a company at a profit. As a result, the business is highly inliquid.

Private equity firms require prior experience in finance or banking. Entry-level associates work primarily on due diligence and financing, whereas senior and junior associates focus on the relationship between the firm and its clients. In recent years, the pay for these positions has risen.

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