Is my business ready for private equity investment?

Private equity (PE) investment is a growth driver for businesses in the UK and globally. For management teams and owners looking to take their business to the next level, PE can provide capital to grow, along with expertise and guidance. 

What are PE investors looking for?

PE firms will each have their own investment criteria, which will frequently include specific sectors. At a fundamental level, PE firms will look to invest in businesses with strong management teams and significant potential to grow relatively quickly. Typically, targets will be profitable and well-established companies.

Is PE right for my business?

PE is not the only option to fund a growing business, however there are multiple case studies of PE investments accelerating growth and delivering financial upside for existing owners and new investors. 

The downsides for business owners can include a loss of outright control and the additional risks associated with increasing leverage in the business. This can leave companies more vulnerable in a downturn. Other non-financial risks may exist in respect of potential changes to company culture and customer perception of the business.

Ultimately it is a judgment for the owners and directors of any business whether to proceed with an offer from a PE investor.

How can I prepare my business?

Three key areas are considered below; weaknesses in these areas will be red flags for most PE investors.

Financial information and processes: A robust finance function producing good quality and timely information is essential in working with a PE investor, both for understanding the current performance of the business, but also in managing growth and having processes that can scale with growth and continue to function as needed. 

Management team: Having the right team in place will be essential for closing a PE investment. Ultimately the investors will be less involved in the day-to-day operations of the business and need to have a great deal of confidence in the team on the ground.

A credible growth plan and a clear strategy to achieve it: Along with the management team, the growth story is the reason an investor will be putting their capital at risk, if this does not stand up to scrutiny the investment is unlikely to proceed. 

The next step

If you require any further information about private equity investments, please contact Robert Magee on, or your usual UHY adviser.

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