Private Equity investment is directed to already established companies or in a growth stage. It can be divided into:
Financing the growth of a company with benefits. The destination of the funds can be directed to the acquisition of fixed assets, increase in working capital for the development of new products and access new markets. They are investments with higher volume and less uncertainty about the existence of historical data.
The firm relieves part of the current shareholders. It is common in family businesses and in situations of succession. It also occurs in some asset sales opportunities or branches of non-strategic activity of very large companies, where its operators or others seeking external financial support in provate equity within a demerger and subsequent independent development.
Leveraged buyouts (LBO)
Acquisition of companies in which a substantial part of the price of the transaction is financed with borrowings, partly secured by the assets of the acquired company themselves, and the other with capital contributed by investors of the deal, who become owners. In these transactions it is usual that the target company has a consistent, stable and enough highcash flow to cope with the payment of interests and repayment of the principal debt.
Capital restructuring or turnaround
Investment in companies in difficulty for a long period of time and needed and financial resources to implement major changes needed to survive. Operational restructuring typically involves covering all aspects of the business (facilities, personnel, products, …).