Aprivate equity firm orprivate equity company (often described as afinancial sponsor) is aninvestment management company that providesfinancial backing and makes investments in theprivate equity of astartup or of an existing operating company with the end goal to make a profit on its investments. The target companies are generallyprivately owned (notpublicly listed),[1] but on rare occasions a private equity firm may purchase the majority of a publicly listed company and delist the firm after the purchase.
To complete its investments, a private equity firm will raise funds from large institutional investors, family offices and others pools ofcapital (e.g. otherprivate-equity funds) which supply theequity. The money raised, often pooled into a fund, will be invested in accordance with one or more specificinvestment strategies includingleveraged buyout,venture capital, andgrowth capital. Although the industry has developed and matured substantially since it was invented, there has been criticism of private equity firms because they have pocketed huge and controversial profits while stalking ever larger acquisition targets.[2]
The history of private equity firms has occurred through a series ofboom-and-bust cycles since the middle of the 20th century with significant growth since the 1980s.[2] Within the broaderprivate equity industry two distinct sub-industries,leveraged buyouts andventure capital, grew along parallel tracks.
In its early years through to roughly the year 2000, the private equity and venture capital asset firms were primarily active in the United States. With the second private equity boom in the mid-1990s and liberalization of regulation for institutional investors in Europe, a matureEuropean private equity market emerged.
Private equity companies, acting asgeneral partners with investors aslimited partners, acquire a controlling or substantial minority position in a company and then look to maximize the value of that investment. Strategies includeleveraged buyout (with borrowed capital),venture capital (for start ups), andgrowth capital (mature companies).[3]
Private equity firms generally receive areturn on investment through one of the following avenues:
According toPrivate Equity International's PEI 300 ranking, thelargest private equity firms includeThe Blackstone Group,Kohlberg Kravis Roberts,EQT AB,Thoma Bravo,The Carlyle Group,TPG Capital,Advent International,Hg,General Atlantic,Warburg Pincus,Silver Lake,Goldman Sachs Principal Investment Group andBain Capital. A 2025 report by Qubit Capital supports these rankings, listingBlackstone,Apollo,Carlyle,KKR,TPG,Bain,Warburg Pincus,Vista, andGeneral Atlantic among the leading private equity firms by assets under management.[4]
These firms are typically direct investors in companies, focusing primarily on leveraged buyouts, rather than investors in the broader private equity asset class, and for the most part the largest private equity investment firms focused primarily onleveraged buyouts rather thanventure capital.
Preqin ltd (formerly known as Private Equity Intelligence), an independent data provider, provides a ranking of the25 largest private equity investment managers. Among the largest firms in that ranking wereAlpInvest Partners,Ardian (formerly AXA Private Equity),AIG Investments, Goldman Sachs Private Equity Group, andPantheon Ventures.
Because private equity firms are continuously in the process of raising, investing, and distributing their private equity funds, capital raised can often be the easiest metric to measure. Other metrics can include the total value of companies purchased by a firm or an estimate of the size of a firm's active portfolio plus capital available for new investments. As with any list that focuses on size, the list referenced above does not provide any indication as to relative investment performance of these funds or managers.
