What is a private equity firm?
It's a term often used in the field of finance to describe a company that invests in another company by buying it out or buying a stake in the company. It generally prefers to have total or significant control of the direction of the company it invests in. The private equity firm will usually have multiple companies in their portfolio.
Where do they get the money to invest?
The private equity firm raises money from institutions such as endowment funds and pension funds, money from wealthy individuals, and the managers of the firm to create the fund. Before they invest in a company, they will borrow money from the banks to pool with their fund.