Private equity investors are an integral part of the financial ecosystem, and they play an important role in the governance of businesses of all sizes across the real economy. As active owners, the governance processes they put in place are not widely understood, and some outsiders are suspicious of the motivations and reward structures that drive the key decision-makers. This book evaluates the mechanisms that private equity fund managers employ to ensure effective oversight of their portfolio companies and the legal rules that regulate their behaviour. It suggests that most private equity fund managers have powerful incentives to ensure that investee companies behave responsibly, take account of relevant environmental, social and governance (ESG) issues, and work to build sustainable businesses in the long term. The author suggests that legal rules in the UK are not well-adapted for the private equity ownership model, but are not in practice a significant determinant of behaviour. At the same time, there is evidence that private equity-backed companies perform better than their peers, and the author suggests that superior governance may be one explanatory factor