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Does Private Equity Make Sense for Your Company?

If you have a revenue-generating business that has been operating satisfactorily for a couple of years, and you are now interested in taking it through to the next leg of growth and expansion— whether it is 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 simple words, private equity is finance provided by potential investors in exchange for an equity stake in the company. This type of funding is typically associated with mature companies with growth potential that need regeneration. Numerous industry sectors benefit from private equity such as technology, industrial, healthcare, banking, and finance.

Is private equity different from venture capital?

People are often confused about the distinction between private equity and venture capital. Venture capital is essentially a form of private equity, but the key difference is that it tends to fund more fledgling companies such as start-ups and emerging firms.

Now that you know a little bit more, don’t stop here – there are plenty of resources out there that will teach you all you need to understand about private equity funding. This is only the beginning.

Considerations

Once you have 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 will 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 have listed some key questions you should ask when trying to find the right investor to partner with for the long-term:

  • 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 firms 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 the capital structure look like?

As well as having these questions, we recommend that there is always a good financial advisor present to guide you on what’s right and what’s not. You will want to find a financial advisor with experience not only in private equity investment, but they must also have the commercial expertise to be able to put themselves in the position of the management or founder.

If you are looking for professional financial consulting services in Delhi NCR, get in touch with me today. My team and I can go over your company’s current financial situation and future prospects to help you make the best financial decisions for your company’s growth.