Explanation: Private Equity (PE)

The acronym "PE" stands for "Private Equity". As a form of corporate financing, PE uses funds from private investors to invest in or acquire companies that are not publicly traded. PE investors can finance various phases of the corporate life cycle, such as the start-up and growth phases or restructuring and takeovers. These investments can take the form of equity investments, whereby shares in the company are acquired. Another variant is debt financing, where the company takes on debt.

Private Equity firms often take an active role in the companies in which they invest. In addition to capital, they provide strategic leadership, operational expertise, and management support, for example, in order to increase the value of the company. The return for PE investors is usually achieved through the sale of their investments: e.g., in the context of an IPO (Initial Public Offering) of the company, through a sale to another investor or through the settlement of debts if the company is successful.

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