Private Equity
How private equity firms invest in established, profitable companies, and how owners can meet them.
Private equity (PE) firms invest in companies that already have revenue and, usually, profits. They buy all or part of a business, help it grow or run more efficiently, and sell their stake a few years later.
For a business owner, private equity can mean selling the company outright, selling a majority while keeping a stake, or bringing in growth capital without giving up control.
- Investor types
- Private Equity Investment Firm (3,184), Investment/Merchant Banking Firm (70)
- Top locations
- New York (432), California (250), Texas (208), Illinois (160), Massachusetts (133)
- Stages funded
- MBO/LBO (2,601), Expansion (2,579), Acquisition (1,048), Recapitalization (1,015)
Common types of private equity deals
- Buyout: the firm buys a controlling stake, often using some borrowed money (a leveraged buyout, or LBO)
- Management buyout (MBO): the existing managers buy the company with the firm's backing
- Growth capital: a minority investment to fund expansion, acquisitions or new markets
- Recapitalization: owners take some money off the table while the company keeps growing
What private equity firms look at
Steady revenue and cash flow, a defensible position in the market, a management team that can stay on, and clear ways to grow value, such as new locations, products, acquisitions or better margins. Expect detailed due diligence on finances, customers, contracts and legal matters.
Frequently asked questions
What size of company do private equity firms buy?
It ranges from small businesses with a few million dollars in revenue (the lower middle market) to very large companies. Many firms state their target size and cheque range.
What is the difference between private equity and venture capital?
Venture capital backs young, fast-growing companies and accepts high risk. Private equity usually buys into mature, profitable companies and often uses some debt.
Will I keep running my company after a private equity deal?
Often, yes. Many firms want existing management to stay, sometimes with a stake in the business. Terms depend on the deal.
Can I find private equity firms on PitchStreet?
Yes. The I Have Money directory lists private equity firms with their focus, stages and locations. Creating a profile and posting your pitch is free. Sending and reading messages needs a Paid Member plan.
Related guides
This guide is general information, not investment, legal or tax advice. Directory figures update automatically. PitchStreet is a network that connects people who need capital with people who have it; it is not a lender, broker or investment adviser.