Considerations for the Company

Key considerations a Private Equity firm would need to take into consideration include:

Financially

• Development capital introduced to provide headroom within the company and ability to deliver growth strategy.
• Private equity have the ability to remove any bank financing, therefore, less onerous covenants with reduced reporting to the bank.

Ongoing cost

• Non rolled up loan note interest.
• Private equity house monitoring fee.
• Chairman fee.

Corporate

• Appointment of chairman.
• 10 board meetings required per year.
• Monthly management reporting to private equity house.
• Appointment of Investment Director and board observers.
• Raise profile and credibility of the company by having private equity investment.
• Improved internal systems and procedures.

Trading

Typical consent matters, which would require approval from the private equity house before being actioned:

• Make material change to nature of the business.
• Capital expenditure over a set value.
• Entering into contracts over a set value, onerous or not at arms’ length.
• Acquiring or disposing of businesses.
• Enter into partnership or joint venture.
• Appointing senior or high paid staff.
• Appointment of Statutory Directors.
• Changes to share capital.
• Appointment of auditors.
• Make any change of bank or terms of any mandate given to any banks.
• Borrow or lend any monies.