Private Equity

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:

Founding shareholder

Full exit

  • 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?

Partial exit

  • 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.

Management team

  • 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
    • covenants
    • 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.