Networth and Chill with Your Rich BFF What is Private Equity ACTUALLY & How Does it Affect YOU?
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Nov 5, 2025 Dive into the world of private equity, where wealthy firms transform businesses through the buy-improve-sell model. Discover how these firms impact your favorite products and services, from your local gym's rising fees to disappearing menu items. Uncover the controversial tactics of cost-cutting and price gouging, while exploring the potential for everyday people to invest in private equity. Plus, learn what to do if your employer gets bought out and whether private equity is truly the villain it's often made out to be.
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What Private Equity Actually Is
- Private equity is ownership of companies not traded on public exchanges and often follows a buy-improve-sell playbook.
- PE firms take private companies or buy public ones then remake operations to sell for a profit.
Bakery Example Of A PE Flip
- Vivian uses a bakery example where PE buys a bakery, fires staff, automates production, and expands distribution.
- After changes, the firm sells the business for a much higher price than the original single bakery.
Who Funds Private Equity
- PE firms are run by general partners (GPs) who source deals and limited partners (LPs) who supply capital, often institutions.
- LPs include pension funds, sovereign wealth funds, and insurers seeking portfolio diversification and higher returns.