Private equity is typically a plan for investors to buy small businesses and then expertly managing the company for growth that the previous management was not performing. The plan is to borrow heavily to buy the business then paying down that debt with increased profits. Ultimately, the plan is to sell in 5-7 years with what is now less debt and at a profitable price. Many deals designed with this model will project much higher returns than we would normally expect in the public stock market.
