Considerations for the company
Key considerations a Private Equity firm would need to take into consideration include:
Financially
- Development capital introduced to provide headroom within the company and ability to deliver growth strategy
- Private equity have the ability to remove any bank financing, therefore, less onerous covenants with reduced reporting to the bank
Ongoing cost
- Non rolled up loan note interest
- Private equity house monitoring fee
- Chairman fee
Corporate
- Appointment of chairman
- 10 board meetings required per year
- Monthly management reporting to private equity house
- Appointment of Investment Director and board observers
- Raise profile and credibility of the company by having private equity investment
- Improved internal systems and procedures
Trading
Typical consent matters, which would require approval from the private equity house before being actioned:
- Make material change to nature of the business
- Capital expenditure over a set value
- Entering into contracts over a set value, onerous or not at arms' length
- Acquiring or disposing of businesses
- Enter into partnership or joint venture
- Appointing senior or high paid staff
- Appointment of Statutory Directors
- Changes to share capital
- Appointment of auditors
- Make any change of bank or terms of any mandate given to any banks
- Borrow or lend any monies