Equity investment usually refers to the buying and selling of shares of stock on the stock market, by individuals and companies. As a result of buying shares in a business, the equity holders, have voting rights on matters such as the candidates for the board, or on particular transactions. This is also a very good way of raising capital for companies, because it gives companies the chance to raise finance by giving investors a say in the company.
Private equity funds are typically closed-end funds, which usually take controlling equity stakes in businesses that are either private, or taken private once acquired. Private equity funds often use leveraged buyouts (LBOs) to acquire the firms in which they invest. The most successful private equity funds can generate returns significantly higher than provided by the equity markets. Also, an example of when equity has been used in start –up companies it is known as venture capital, and is regarded as a very high – risk investment.

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