Even the most successful businesses sometimes need capital to invest. This could be during a busy acquisition period, just before an IPO, international expansion, the development of a new product, or other major actions that temporarily require extra money. As a company, you could ask the bank for this capital, but chances are that the bank deems the risk too great. In this case, selling part of the company to private equity is the solution.
By selling shares to private equity, you maintain a level of equity that allows you to attract other forms of financing. What’s more, private equity funds often have stakes in dozens of companies, giving them access to a broad network of knowledge, expertise, and experience. So when you need (temporary) capital in the short term for an IPO, acquisition, or international growth, selling to private equity is a strategic move.