A private equity firm acquires an interest in a company that is not publicly listed and then seeks to turn the company around or grow it. Private equity firms usually raise funds through an investment fund that has a defined structure and distribution waterfall and invest that money into the companies they want to invest in. Limited Partners are the investors in the fund, whereas the private equity firm is the General Partner, responsible for buying selling, managing, and buying the targets.

PE firms can be accused of being ruthless and pursuing profits at every price, but they have extensive management experience that enables them to boost the value of portfolio companies by improving operations and other functions. They can, for example, guide a new executive team by guiding them through the best practices in financial and corporate strategy and assist in the implementation of streamlined accounting, IT, and procurement systems to reduce costs. They can also boost revenue and improve operational efficiency, which can help them increase the value of their assets.

Private equity funds require millions of dollars to invest and they can take years to sell a company at a profit. This is why the industry is extremely illiquid.

Private equity firms require experience in banking or finance. Associate click reference entry-level associates are mostly responsible for due diligence and financials, while senior and junior associates are accountable for the relationship between the clients of the firm and the firm. In recent times, compensation for these positions has increased.