What is Private Equity?
Private equity is finance provided in return for an equity stake (supported by loan notes) within a company. They are generally medium to long term investors, typically investing in companies between three to ten years, which means a commitment to build a lasting and sustainable value within the business.
Private equity raise their investment funds from institutional investors such as pension funds and high net worth individuals.
To generate returns for their investors, the private equity house looks to create value through supporting high quality management teams and a credible business growth plan, then realising their investment through a strategic trade sale, second round of private equity funding or public listing.
Is private equity a viable option?
Private equity is not appropriate for all businesses, but scenarios where it can work very well include: