Private Equity

Private equity — commonly abbreviated PE — refers to capital invested in companies that are not listed on a public stock exchange. The two most common entry points for families are committing capital to a PE fund (where a professional manager, called a general partner or GP, selects and manages companies on behalf of investors) or making a direct investment into a specific company. PE spans a wide range of strategies, from venture capital backing early-stage startups to buyout funds acquiring established businesses.

For a family office, PE is often one of the largest allocations within alternative investments. Families are attracted by the potential for returns that exceed public market equivalents over long periods, though those returns are not guaranteed and come with significant illiquidity. A typical PE fund has a ten-year life, meaning capital committed today may not be fully returned for a decade.

A common confusion is equating PE with venture capital. While VC is technically a subset of private equity, the term "private equity" in practice usually refers to later-stage strategies — growth equity and buyouts — involving more mature companies with established revenues. Families working through manager selection and due diligence for PE funds will encounter fee structures, capital call mechanics, and legal agreements that are considerably more complex than those in public market investing. Qualified legal and tax counsel is essential before committing to any fund structure.