by Tom Matthews
Private equity explained
Private equity describes a broad range of funds that pool investors’ money to invest in growth-orientated, revenue and profit generating companies. These funds invest directly in privately-owned companies. They then work with founders and management teams to accelerate the growth of these businesses.
Right for you?
So, what can private equity do for you? Whilst every business is unique, the catalysts that drive business owners and management teams to seek investment tend to be consistent and include:
1) Expansion capital
If you’re looking to expand into new markets, make an acquisition or fund rapid growth, a private equity investor can provide the finance, strategic support and access to its network of contacts to accelerate the journey.
2) Selling your business
Whether it’s time to retire, step-back from the day-to-day operations, pass the business on or move onto something new, a private equity investor can help you to realise the value of your hard work. This can help to take the business forward to the next stage and leave a successful personal legacy.
3) Selling part of your business
Selling a part of your business can help to de-risk your own personal finances whilst allowing you to stay closely involved and in control of your business. With the combination of personal financial security and the help of an experienced private equity partner, you can afford to be bolder in your strategic decision-making.
4) Own the business you run
Private equity can invest capital to help management teams acquire equity ownership of the company they have helped to build. This can include supporting the transition from employee to equity owner and providing strategic advice to help accelerate business growth.
If you think that private equity might be right for you then ensure you do your homework. Take references – speak with people that they have worked with in the past. Make sure there is alignment of the future growth strategy. And ensure you get to know the individuals that will be working with the company post completion.