How to acquire Private Equity invesment

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After the company has gone through many rounds of investment from angel and venture capital investors and is now an established entity, the next step is to expand or go public.

Private equity firms or investors are the ones whom make this happen.  

Private equity investors are usually organizations preferring to invest in a privately held company. The company is older and would have higher valuations. It ideally would have also been functioning for several years.

However, these investors, like venture capitalist investors, have a strict and thorough evaluation process before they decide to invest.

Private equity firms look for companies that;

1. Have a proven track record with developed product(s) and customer base

2. Have plans to expand, either within the country or overseas

3. Are in a healthy niche or sees growth in chosen segment

4. Are open to the possibility of corporate governance

5. Have an exit option such as IPO in a few years.

The private equity investment is a short-term investment but their investment capital is also considerably larger.

As a result of this, the firm will require the company to open up a minimum of one board seat for a representative of the firms' choice.

In order for this to be a productive approach, you will need to research private equity firms thoroughly as each firm has its own preference in different sectors and also the sub-sectors within.

If your company is able to, within a short period of time, outperform your competitors, you would catch the firms' attention.

Having an exit strategy is very important to all investors involved. Private equity investors are generally looking at a 3-5 year period after which the company preferably takes an IPO or is acquired by another company.

Private equity firms have only one intention; make money in a short span of time. If you intend to pass your business of to your child or another heir as part of your legacy, private equity is probably not the best path to take.

If you have every intention of going public and selling high within a few short years, then private equity could be the last round of investment you will need to hit that mark.

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