Businesses backed by private equity can grow faster than companies with different funding structures, thanks to the combination of capital and strategic input from experienced partners.
There are also many different scenarios where private equity investment can be the right next step for a business.
For business owners, seeking the support of an external investor is not only a way of driving growth. It can also provide an opportunity to start thinking about the future of the business. Specifically, unlocking the challenges for those without a clear succession plan and building a team that will help to move the business forward.
As an investment partner, we work closely with many business owners who have reached a stage in their career where they are looking to take a step back, de-risk and realise some of the value they have created. The support of private equity can help do just this, while still protecting the company they have created.
Similarly, private equity can provide an alternative to a conventional sale to a corporate buyer or IPO. It can enable existing shareholders to maintain control of their business and share in the upside from a successful sale process in the future.
Private equity is also used to replace existing third-party investors – such as other private equity funds, venture capital trusts, angel investors or friends and family members. In many instances, replacing a disparate group of investors with a single partner can help to galvanise a business whilst enabling other shareholders to achieve a return on their original investment.
Increasingly, private equity is used to enable existing shareholders to de-risk by selling a minority shareholding in the business they’ve built, while bringing on board an investment partner to help take it to the next level.