An introduction to private equity
How this Guide can help you
What is private equity?
Would my company be attractive to a private equity investor?
Some of the beneﬁts of private equity
Questions to ask yourself before reading further
Internal and external ﬁnancial resources
Government sources of ﬁnance for SMEs and growing businesses in the UK
Investment forums and networking organisations
Well-known private equity backed companies
The advantages of private equity over senior debt
Private equity compared to senior debt
Sources of private equity
Private equity ﬁrms
Where do private equity ﬁrms obtain the money to invest in my business?
How may the source of a private equity ﬁrm’s money affect me?
How do I select the right private equity ﬁrm?
Selecting a private equity ﬁrm
1. Stage/type of investment
2. Industry sector
3. Amount of investment
4. Geographical location
The business plan
Essential areas to cover in your business plan
1. The market
2. The product or service
3. The management team
4. Business operations
5. Financial projections
6. Amount and use of ﬁnance required and exit opportunities
The presentation of your business plan
Things to avoid!
The investment process
Reaching your audience
How quickly should I receive a response?
How do private equity ﬁrms evaluate a business plan?
Presenting your business plan and negotiations
Valuing the business
Personal ﬁnancial commitment
Types of ﬁnancing structure
Classes of capital used by private equity ﬁrms
Other forms of ﬁnance provided in addition to equity
Additional points to be considered
Speciﬁc considerations relating to venture capital and management buyout deals
1. How a venture capitalist arrives at his required equity stake
2. Use of preference shares in structuring a venture capital deal
3. Management buyouts
The Offer Letter (Term Sheet)
The due diligence process
Additional private equity deﬁnitions
The role of professional advisers
The ﬁnancial adviser’s role
The accountant’s role
The lawyer’s role
Your relationship with
Private equity for growth and success
Help to avoid the pitfalls
Tips for working with your private equity investor
Guidelines for success
Realising the investment
Valuing the investment on exit
Before you do anything –
Legal and regulatory issues you must comply with in raising ﬁnance
Appendix – further information
BVCA publications and research
Other useful contacts