Private equity firms collate a pool of money and invest in underperforming businesses with a view to turning them around and exiting with a positive gain. Investors generally assume a managerial interest in the business as well to help shape the future direction.
Private equity in practice
The role of private equity investors
They will take a very hands-on approach to being involved in the day-to-day running of your business, often making significant changes from the outset. They will provide financial, strategic and operational input as required in order to steer the business to an enviable position.
Private equity investors will typically look to exit the business between 3 and 7 years after the original investment took place.
Does my business meet the criteria?
Although private equity investors look for under-performing businesses, they must be able to demonstrate the potential to succeed. An investor will need to see:
- A proven management team with relevant sector experience
- Management with shared responsibility, not a single dependency
- A desirable market position, niche or brand
- A competitive offering with an identifiable USP
- A sound business strategy capable of achieving growth