How it works:
Private equity firms buy stakes in companies, allowing business owners to buy out a partner, reinvest in the company, or pocket the cash.
Deals typically close in three to 12 months, during which time businesses create proposals and vet bids.
The price tag:
Legal and accounting fees start at 1 percent of the deal amount and increase according to complexity.
The bottom line:
Most private equity firms expect annual returns of 20 to 35 percent and plan to exit in three to seven years, usually through a sale.