We are very well connected to many private equity and venture capital funds and focus on matching the best placed investor to the right deal.
Considerations for The team
Key considerations a Private Equity firm would need to take into consideration include:
- Large element of cash received on day one.
- Reduce risk – realise value on day one.
- Restrictive covenants for exiting shareholders.
- Aim to maximise day one cash through maximum valuation of the company.
- Maximum valuation – is a strategic trade sale going to achieve a greater value?
- Dilution of shareholding and loss of control.
- Founder shareholder rights for good / bad leaver.
- De-risk through day one cash out and ring fenced value.
- Share of future upside through rolled over equity.
- Less cash out on day one due to element of value to be ‘rolled over’ going forward.
- Break down of rolled over value between loan notes and equity.
- Element of rolled over value ring fenced through loan notes or freezer shares.
- Availability of other finance that has a lower cost.
- Management’s confidence and belief of achieving the business plan.
- Distribution of sweet equity to new and existing members of the management team.
- Composition of new board and voting rights.
- Additions / gaps required to be filled to complete the management team.
- Appreciation of private equity restrictions:
- good / bad leaver
- swamping rights
- drag rights
- consent matters
- Enough left in to incentivise the management team.
- Strength of second tier of management.
- New service agreements to be issued.
- Private equity transaction fees to be funded by Newco. Fee typically greater than £1 million.
- Less cash out than existing shareholders due to private equity house, working management to be incentivised to grow the value of the value of the business.
- Appointment and relationship with Investment Director and Chairman.