Is Private Equity Right For Your Company?
If you have a revenue generating company that's been
operating for a couple of years, and you're interested in taking it through to
the next stage of growth - whether it's some cash injection or a complete
overhaul - then consider looking into partnering with a private equity
investor.
First of all, what is 'private equity'? In short, it's
finance provided by investors in exchange for an equity stake in the company.
This type of funding is generally associated with mature companies with growth
potential that need regeneration. A wide range of industry sectors benefit from
PE such as technology, industrial, healthcare, banking and finance and more.
People are often confused about the difference between
private equity and venture capital. Venture capital is actually a form of
private equity but the main difference is that it tends to fund younger
companies such as start-ups and emerging companies.
Now that you know a little bit more, don't stop there -
there's plenty of resources out there that will teach you all you need to know
about private equity funding. This is only the beginning.
Once you've done some more research, let's take you through
what you would need to do to acquire this type of funding for your company. The
first thing you'll need to do to start your journey is to interview potential
investors.
We understand how complex it is to search for the right
investor, so we've listed some key questions you should ask when trying to find
the right investor to partner with for the long-term:
Key questions:
- How much control will management and shareholders have?
- Will there be follow-on investments? If so, what are the terms?
- How experienced are the private equity firm in your sector?
- Who are the main points of contact?
- What will happen if either party wants to exit the deal?
- What costs will the business be responsible for?
- What is the investment horizon?
- What does capital structure look like?