Private equity transactions involve a variety of different business structures.

Private equity investments may be an injection of new capital into a private company with the intent of providing its founders or current owners with the capital necessary to take the company’s performance to the next level.

It may involve the acquisition of a non-core division of a large company, with the purpose of offering the newly-independent business and its management focus and the resources needed to achieve their goals in a more effifient way.

Private equity transactions may also involve “public to private” deals in an effort to undertake operational improvements that would be difficult to achieve under public ownership given the relatively strong focus on the quarterly earnings of public companies.

Prior to the recent stock market meltdown, public-to-private transactions had had their share of the limelight. In 2006, private equity took companies worth a total of USD 150 billion (article cited in the Financial Times) from the public to the private market. If these companies were to be brought back to the public market through IPOs (Initial Public Offerings), the private equity managers would have spent this time in between by trying to increase the value of these businesses. By means of public–to-private transactions the ownership structure in industries can move from a large number of more or less passive shareholders to a much smaller number of active private owners.