--- title: "Private equity | Altss Taxonomy" description: "Private equity is equity investment in companies that are not publicly traded, or are being taken private, usually made through closed-end funds run by a…" canonical: "https://altss.com/taxonomy/private-equity" --- Topic hub # Private equity [Private equity](https://altss.com/glossary/private-equity) is equity investment in companies that are not publicly traded, or are being taken private, usually made through closed-end funds run by a [general partner](https://altss.com/glossary/general-partner). This hub covers the strategies, transaction types, deal process, deal terms and operating metrics used to buy, own and sell [portfolio companies](https://altss.com/glossary/portfolio-company). Sections follow the life of a deal: strategies ([leveraged buyouts](https://altss.com/glossary/leveraged-buyout), [growth equity](https://altss.com/glossary/growth-equity), [buy-and-build](https://altss.com/glossary/buy-and-build)), transaction types, the deal process, deal terms, ownership and value creation, metrics, and exits. [Independent sponsors](https://altss.com/glossary/independent-sponsor) and [search funds](https://altss.com/glossary/search-fund), which raise equity for a specific acquisition instead of drawing on a committed fund, have their own section. Not in this hub: [Venture capital](https://altss.com/taxonomy/venture-capital) and [Secondaries](https://altss.com/taxonomy/secondaries) have their own hubs. Distressed debt and restructuring are in [Private credit](https://altss.com/taxonomy/private-credit). The terms of the fund itself, such as fees, carried interest and LP rights, are in [Fund terms and economics](https://altss.com/taxonomy/fund-terms-and-economics). Publisher: Altss LLCPublished 2026-01-05Content modified 2026-10-01 31 concepts ## Reference index Definition: [Private Equity (PE)](https://altss.com/glossary/private-equity) — Private equity (PE) is the asset class of equity and equity-like investments in unlisted companies, or companies being taken private, usually made through closed-end funds run by a general partner and realised through a sale or listing. ### Strategies 6 concepts - [Leveraged Buyout (LBO)](https://altss.com/glossary/leveraged-buyout) A leveraged buyout (LBO) is the acquisition of control of a company by a financial sponsor, paid for partly with borrowed money that is secured on, and repaid from, the acquired company's own cash flows and assets. - [Growth Equity](https://altss.com/glossary/growth-equity) Growth equity is investment, usually a minority stake bought as preferred or other structured equity, in an established company with proven revenue that uses the capital to expand or to give existing owners partial liquidity. - [Buy-and-Build](https://altss.com/glossary/buy-and-build) Buy-and-build is a private equity strategy in which a sponsor acquires a platform company and grows it through a programme of add-on acquisitions, aiming to sell a larger business for more than the combined prices paid and invested. - [GP Stakes](https://altss.com/glossary/gp-stakes) GP stakes investing is the purchase of a minority, usually passive, equity interest in a private markets firm, giving the investor a share of the firm's management-fee earnings and often of its carried interest and balance-sheet investments. - [Co-Investment](https://altss.com/glossary/co-investment) A co-investment is a minority equity investment made directly in a specific portfolio company alongside a private fund sponsor's main fund, typically offered to the fund's LPs or other partners on reduced or no management fee and carried interest. - [Direct Investment](https://altss.com/glossary/direct-investment) ### Transaction types 6 concepts - [Platform Investment](https://altss.com/glossary/platform-investment) A platform investment is a private equity fund's initial acquisition in a sector, usually a control buyout, made with the intention of growing the company through further acquisitions (add-ons) as well as organic growth. - [Add-On Acquisition](https://altss.com/glossary/add-on-acquisition) An add-on acquisition is the purchase of a company by an existing private equity-owned portfolio company (the platform), funded from the platform's debt capacity, cash, seller financing or new sponsor equity, to add scale, products, customers or geography. - [Take-Private](https://altss.com/glossary/take-private) A take-private is the acquisition of all the shares of a listed company by a private buyer, usually a private equity sponsor using a leveraged buyout structure, after which the shares are delisted and the company is privately owned. - [Secondary Buyout (SBO)](https://altss.com/glossary/secondary-buyout) A secondary buyout (SBO) is a leveraged buyout in which one private equity sponsor sells a portfolio company to another, unaffiliated sponsor, so control passes from one financial owner to the next. - [Corporate Carve-Out](https://altss.com/glossary/corporate-carve-out) A corporate carve-out is the acquisition of a division, subsidiary or business line from a larger company, which must then be separated from its former parent into a stand-alone business with its own systems, people, contracts and financial statements. - [Dividend Recapitalization](https://altss.com/glossary/dividend-recapitalization) A dividend recapitalization is a transaction in which a company, usually owned by a private equity sponsor, raises new or incremental debt and uses the proceeds to pay a dividend or other distribution to its shareholders. ### Deal process 4 concepts - [Deal Sourcing](https://altss.com/glossary/deal-sourcing) - [Underwriting](https://altss.com/glossary/underwriting) - [Quality of Earnings (QoE)](https://altss.com/glossary/quality-of-earnings) A quality of earnings (QoE) report is a transaction-focused financial due diligence analysis that tests whether a target's reported and adjusted EBITDA reflect sustainable, cash-generating earnings and quantifies normalisation adjustments, working capital and debt-like items. - [Investment Committee](https://altss.com/glossary/investment-committee) ### Deal terms and documents 2 concepts - [Rollover Equity](https://altss.com/glossary/rollover-equity) Rollover equity is the part of a seller's or manager's existing ownership that is reinvested into the buyer's acquisition vehicle instead of being paid out in cash, so the seller keeps a stake in the business after the sale. - [Earnout](https://altss.com/glossary/earnout) An earnout is a contractual promise by a buyer to pay additional purchase price to the seller after closing if the acquired business meets agreed financial or operational targets over a defined measurement period. ### Ownership and value creation 3 concepts - [Portfolio Company](https://altss.com/glossary/portfolio-company) A portfolio company is an operating company in which a private equity, venture capital or other private fund holds an investment, whether a controlling stake or a minority position. - [Operating Partner](https://altss.com/glossary/operating-partner) - [Value Creation](https://altss.com/glossary/value-creation) ### Metrics 3 concepts - [Adjusted EBITDA](https://altss.com/glossary/adjusted-ebitda) Adjusted EBITDA is EBITDA modified by add-backs and deductions that remove items management or a contract treats as non-recurring, non-operating or unrepresentative; pro forma versions also add acquired earnings and planned cost savings. - [Debt-to-EBITDA (Leverage Multiple)](https://altss.com/glossary/debt-to-ebitda) Debt-to-EBITDA is the ratio of a borrower's debt to its EBITDA, usually over the last twelve months, expressed as a multiple ("turns"); leveraged lenders use it to size loans and commonly test it in financial covenants. - [EV/EBITDA Multiple](https://altss.com/glossary/ev-ebitda-multiple) The enterprise value to EBITDA multiple (EV/EBITDA) is enterprise value divided by earnings before interest, taxes, depreciation and amortisation (EBITDA); it expresses a business's value as a multiple of its operating earnings and is commonly used to price buyouts. ### Exits 1 concept - [Exit Strategy](https://altss.com/glossary/exit-strategy) ### Independent sponsors and search funds 5 concepts - [Independent Sponsor](https://altss.com/glossary/independent-sponsor) An independent sponsor is an individual or small team that sources, negotiates and leads acquisitions of private companies without a committed fund, raising equity for each transaction from capital partners such as family offices and private equity funds. - [Independent Sponsor Economics](https://altss.com/glossary/independent-sponsor-economics) Independent sponsor economics are the payments a deal-by-deal sponsor negotiates for each transaction, typically a closing fee, an ongoing management or consulting fee, a promote on the capital partner's profits and the return on its own co-investment. - [Entrepreneurship Through Acquisition (ETA)](https://altss.com/glossary/entrepreneurship-through-acquisition) Entrepreneurship through acquisition (ETA) is the path to business ownership in which an individual or small team buys an existing, usually privately held small or mid-sized company and runs it, instead of founding a new one. - [Search Fund](https://altss.com/glossary/search-fund) A search fund is an investment vehicle through which investors pay for an entrepreneur's search for a private company to buy, receive the right to fund the acquisition, and back the entrepreneur as the acquired company's chief executive. - [Search Fund Economics](https://altss.com/glossary/search-fund-economics) Search fund economics are the terms that divide an acquired company's value between investors and the searcher: a step-up on search capital, participating preferred equity for investors, and searcher common equity that vests in tranches. ## Canonical URL https://altss.com/taxonomy/private-equity