PRIVATE EQUITY | DEMYSTIFY
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PE houses differentiate themselves by tackling different parts of the market. Typically:
TYPICAL STRUCTURE
X Size/‘cheque size’ : small cap (up to £50m); mid cap (between £50m-£350m); large cap, where cheque sizes are very large (£350m and over) X Geography : some are restricted to invest in one geography, for example the UK (LDC); some are international, covering Western Europe for example (Equistone); and some are global (CVC, Blackstone etc) X Sector : technology; healthcare life sciences; manufacturing etc. X Stage : growth; stressed; distressed X Type : majority or buy-out; minority or partnership capital; development capital; venture. Some (mainly US based or large cap PE houses) use the terms leveraged buy-out or institutional buy-out. The first references the use of debt or leverage and the second references that the investment monies are largely from big institutions (pension funds and insurance companies). The terms are often used interchangeably, but they can convey subtle differences to the attitude of management. In the UK there are approaching 1,000 PE funds and in the US there are a staggering 7,000.
PE HOUSE
LOAN NOTES £24m
FUND
£800k
TOPCO
MIDCO
MANAGEMENT £200k
BANK £25m
BIDCO
TARGET
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