It is impossible to imagine the acquisition landscape without private equity as a possible buyer and financier. But what is private equity and when is this a suitable option for you as an entrepreneur? We will take you through the most important facts you have to know about private equity.
What is private equity?
In short: it represents private capital, but we also use this term to describe a group of investors that invest in companies, outside of the stock market. These firms usually invest for a certain number of years, after which they sell their share at market price.
When is private equity the right choice for you?
The presence of investment firms in business acquisitions has grown considerably in the past few years. There are several reasons for this. Think, for example, of the lack of succession, a shortage of growth capital or no proper guidance in the process of further internationalisation. Furthermore, it has become increasingly difficult to get financing through a bank. In parallel to this, the current low interest rates play a part, which makes investing in companies an attractive way to make your capital pay off.
For you as an entrepreneur, this means that a private equity firm is a good option when considering the sale of your company. By selling your shares to private equity, your capital remains level and you profit from a wider network of knowledge, expertise and experience. Quite often, it also affects the expansion of the range of services and geological coverage. Private equity offers a solution to achieve the desired growth; either by selling 100% of the shares at once or by creating a growth plan together to make your company stronger. A pre-exit allows you to cash out part of your equity and sell your shares in parts.
Benefits of private equity
- Attracting investors without being listed
- Access to knowledge and expertise from the private equity fund
- Capital available to quickly realise goals and ambitions
- The success of your company is the common interest
- Expansion of your own network
Collaborating with an investment fund
If you are considering working with a private equity firm, you are no doubt curious about what that would look like in practice. Because each investment company has its own reasons for investing, there is no conclusive way to describe the process. In short, we distinguish between private equity investors that are “hands-on” and those that are “hands-off”, which is a clear indicator of the extent of the investor’s commitment. In several meetings, we will explore meticulously which format suits your particular situation and if it matches the potential buyer.
Our experience with private equity has taught us that collaboration with a PE investor is a good way to get your hands on capital while keeping control over your company so you can make your vision a reality. The investor has no motivation or ambition to take over your role, but at the same time can offer the in-depth knowledge and experience of an investment partner who is pursuing the same interests. We actively search for private equity investors who fit you and your company so you can decide what feels right and which choices to make – and you can always count on our honest advice.
Are you considering an acquisition?
Are you considering selling your company and would you like to know whether private equity is a good option for you? Do not hesitate to contact one of our advisors. For more than 25 years Marktlink has been the leading M&A specialist for entrepreneurs in the upper SME segment. Thanks to nine offices throughout five European countries, we have an extensive international network and local market knowledge. Our M&A specialists are committed and passionate about supporting you in making the deal of a lifetime. At Marktlink, the entrepreneur is our focus; we strive to achieve the best result for you.