<Tr> <Td> <Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> </Td> </Tr> <Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> Private equity typically refers to investment funds organized as limited partnerships that are not publicly traded and whose investors are typically large institutional investors, university endowments, or wealthy individuals . Private equity firms are known for their extensive use of debt financing to purchase companies, which they restructure and attempt to resell for a higher value . Debt financing reduces corporate tax burdens and is one of the principal ways in which private equity firms make business more profitable for investors . Private equity might also create value by overcoming agency costs and better aligning the incentives of corporate managers with those of their shareholders . </P> <P> P.E. is, strictly speaking, a type of equity and one of the asset classes consisting of equity securities and debt in operating companies that are not publicly traded on a stock exchange . However the term has come to be used to describe the business of taking a company into private ownership in order to reform it before selling it again at a hoped - for profit . </P>

Where do private equity firms get their money