Private equity vs. investment banking
In brief private equity firms acquire and manage companies, and investment banks raise capital and provide financial advice to companies.
Private equity refers to buying and selling privately held companies to improve their operations and then selling them for a profit. Private equity firms typically create Private equity funds by raising capital from institutional investors and high-net-worth individuals. The PE firm then manages those funds to acquire and manage companies creating a return for their investors.
Investment banks provide advisory services for mergers and acquisitions (M&A) and raise capital by underwriting securities. In addition, investment banks act as intermediaries between companies needing to raise capital and investors looking for opportunities to invest their money. Investment banks also help companies issue debt or equity securities and provide industry insights.