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Finance Glossary

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Private Equity


Another way that companies can raise money and investors can make money.

Private equity firms team up with investors (like charities or college endowment funds); investors pony up money, and the firms buy companies to flip. They improve the company and then sell it at a profit that they pass onto investors. The company ends up being more profitable and investors make money.


If you want to become an investor, keep in mind that this type of investing requires deep pockets. Depending on the private equity firm or fund, you might have to pony up $250,000 or more to get started as an investor.