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What is private equity?


I read this article:
http://money.cnn.com/magazines/fortune/f...
and i don't understand it. What exactly is private equity? Why is the author making such a big deal out of it?

Private equity is when an investment is funded by private peoples money (they did not do an Public offering). What this article is talking about is how the school's is investing in new companies, then when the company becomes big enough to sell stock the fund would receive a percentage of the stock and sell it for a profit. The reason why this is risky is that at least 90 percent of all small businesses fail. Would you like your retirement to be tied into this type of investments?

Private Equity is the ownership stake that results from investment in a private (not publicly traded) company. Investors in Private Equity generally are Individuals called Angel Investors, Business Development Companies, and Venture Capital Funds.

This refers to the holding of stock in unlisted companies 鈥?companies that are not quoted on a stock exchange. It includes forms of venture capital and MBO financing.

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