Private equity is an ownership model, generally investing in unlisted companies, playing a vital role in growing companies in many countries and industries.
Over the past few decades, private equity in Europe has grown and today forms an integral part of the economy. Private equity investments in portfolio companies – and the strategic development of these companies which typically follows – have resulted in new global champions being created as well as the consolidation of entire industries, resulting in companies that are able to compete successfully in the international arena.
Principal Situations for Private Equity Investments
In general, there are three principal situations for private equity investing:
- Buyout means acquiring a controlling interest in a more mature company. The acquisition often entails a complete change in ownership and the application of new strategies to add value to the company.
- Growth capital helps companies grow. They may need help to finance a new factory, a rapid geographical expansion or to develop new product lines.
- Special situations involve investment in a distressed company, or a company that faces special challenges.
In all these cases, the private equity fund is seeking a high-quality management team and a strategic plan to grow and improve the business.