A type of investment strategy that buys, restructures, and sells private companies for profit. This extractive financial technique was originally known as a leveraged buyout in the 1980s and 1990s, but developed such a bad reputation that it was rebranded as the more opaque term private equity. In order to acquire the company, a PE firm, such as Bain Capital or Blackstone, raises the capital from asset managers, institutional investor funds, wealthy investors, and other PE firms. The acquisition is often supplemented by debt, which is raised using the target company as collateral; the target company is then saddled with the debt used to purchase it.

DEFINE: Explains private equity as the rebranded form of leveraged buyouts, clarifying the opaque terminology.

Andrew deWaard, Derivative Media, loc. 492