Private equity or PE is a form of funding by PE firms for companies which have established operations, cash flows, charting a pathway to profitability but not necessarily profit-making, and are suitable for taking on debt for financing.
The companies up for PE funding could be privately-owned or public companies about to be taken private.
PE firms could also look at buying out unprofitable ventures to restructure and turn a profit or even buyback the shares of a publicly-held company to work on its performance. Leveraged buyouts are a classic example of a PE firm’s modus operandi.
Other kinds of non-public equity funding for a business are venture capital and seed funding.