Private equity firms are investment companies that use pooled funds from investors to acquire and manage private companies or take public companies private. Their goal is to improve the financial performance of these businesses over a period of time, typically ranging from four to seven years, before selling them for a profit. These firms often focus on specific industries or sectors and may provide strategic guidance, operational improvements, or additional capital to help the companies grow. After enhancing the value of their investments, private equity firms usually exit through sales, mergers, or public offerings, generating returns for their investors.