Private equity firms are investment management companies that provide capital to private companies or buy out public companies, transforming them into private entities. They typically invest in companies with growth potential, aiming to improve their operations and profitability before eventually selling them for a profit. These firms often raise funds from institutional investors and high-net-worth individuals, pooling resources to acquire stakes in various businesses. The investment strategy of private equity firms usually involves a hands-on approach, where they actively participate in the management of the companies they invest in. This can include restructuring operations, enhancing efficiency, and driving growth initiatives. Successful private equity investments can yield significant returns, benefiting both the firms and their investors.