Private equity refers to investment funds that buy and restructure private companies or take public companies private. These funds are typically managed by firms that pool capital from various investors, such as wealthy individuals and institutional investors, to acquire stakes in businesses with the goal of improving their performance and increasing their value. After acquiring a company, private equity firms often implement strategic changes, such as improving operations or expanding into new markets. Once the company has increased in value, the firm may sell it or take it public again, aiming to generate significant returns for their investors.