In Nigeria, the introduction of Private equity (PE) has emerged as one of the significant financing options for businesses. Based on its ability to provide long-term capital, PE often addresses financial gaps in cash strained businesses. Thus the present study investigates the impact of private equity (PE) on enterprise liquidity in Nigeria, focusing on how private equity financing impacts the ability of businesses to meet short-term obligations. The study employed quantitative techniques, while data were collected from 803 samples from a population of 9 602,249 registered Small and Medium Enterprises (SMEs) in Southwest Nigeria. The study's objectives were analysed, and it was found that PE has a significant effect on enterprise liquidity with \(\beta \, = \,0.{666}\) ; \({\text{R}}^{{2}} \, = \,0.{57627}\) ; t = 25.295; p < 0.05; \({\text{F}}_{{({5},{8}0{3})}} \, = \,{298}.{179}\) . Goodness of Fit: \(\chi^{{2}} \, = \,{415}.{486}\,\left( {{\text{p}} < 0.000} \right)\) ; \(\chi^{{2}} /{\text{df}}\, = \,{3}.{986}\) ; RMSEA = 0.098, SRMR = 0.061; CFI = 0.984; TLI = 0.963 and the p-value; p < 0.05; \({\text{F}}_{{({5},{8}0{3})}} \, = \,{298}.{179}\) which indicates a significant effect of PE on EL. The study highlights key liquidity tendencies hence offers perceptions into the broader implications for economic development. The result from the study suggest that private equity improves liquidity metrics, enabling businesses to improve financial stability and operational efficiency.