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    Five benefits of private equity investment

    When looking into the sale of their company, many owners discount the prospect of private equity investment, with many holding concerns revolving around “not wanting to work for someone else”, “becoming employed rather than self-employed” and “a loss of control”.

    In contrast, we at KBS Corporate believe that private equity deals can deliver excellent terms for company owners considering a sale. As a result, we have compiled a short list, below, of some of the many benefits that private equity investment can offer.


    1. Private equity investors could provide you with the best value for your shares

    Our years of experience have shown us that private equity deals can provide large amounts of funding to company owners looking for a return on their shares and an injection of cash to accelerate growth. Often, in the right circumstances, private equity investment can provide significantly higher value to a company owner than a traditional trade sale.

    This is due to private equity houses having large amounts of funding available, and continually being on the lookout for companies with growth potential. With private equity investors being no stranger to the M&A market, they know how to identify such growth potential, and will often be willing to pay higher values for businesses that they feel will generate significant returns in the future.

    1. Long term investment can be beneficial for your company

    Private equity houses typically invest in companies for a long period of time; this can be up to five, ten, or even twenty years.

    A long investment horizon can benefit a company in a number of ways. The main reason being that the investor will use their time wisely to create a careful strategy, seeking to minimise risk and preserve capital.

    The patient approach that most private equity houses employ ensures that final value is extracted from the company at the right time; when the market or sector is at its strongest, at a time when investors or acquirers are drawn to the opportunity.

    1. Private equity investors are experts at creating value

    BVCA’s Guide to Private Equity states that private equity backed companies have been shown to grow faster than other businesses; a 2012 study by The Boston Consulting Group provided supported this, by finding that more than two thirds of private equity deals resulted in the company’s annual profits growing by at least 20%.

    These impressive returns are due to one factor; private equity investors are highly skilled at what they do. Most investors have years of experience within the field, and so you can guarantee that your business will be in capable hands post-investment.

    1. You can continue to run the company as normal without too much direct involvement from the investor

    Although private equity investors tend to take ownership of most, or all, of your company’s shares, they don’t always take a direct role within the business, allowing you to remain within the company in a managerial role, with the added benefit of additional financing and expert guidance.

    Many investors will help you to develop a clear strategy and stable growth plan at the offset of their investment period, then take a back seat in the actual delivery of the strategy as they allow you to manage your business on a day-to-day basis. Therefore, selling your business to a private equity firm doesn’t necessarily mean that you will be employed by someone else.

    Even though selling a portion of your shares to private equity will leave you with less value at the beginning, within a few years your shares should be worth considerably more than the whole company was worth prior to private equity investment.

    1. Private equity firms want your business to do well

    The private equity investor has funds tied up within your business, meaning that they want and need your business to succeed in order to generate a return. This incentive will ensure that they are wholly committed to ensuring the success of your company over the course of the investment period.


    If you are considering the sale of your company, or are simply interested in learning more about the many benefits of private equity investment, please feel free to get in touch with us today on 0161 951 5506, or make a confidential enquiry here.


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