What different types of private equity transactions occur in your jurisdiction? What structures are commonly used in private equity investments and acquisitions?
The most common types of private equity transactions include leveraged buyouts, often in conjunction with the participation of management. These transactions could be structured as a takeover bid, court-approved plan of arrangement, amalgamation or asset sale. Depending on the circumstances, private equity firms will also occasionally take minority positions in companies or invest in the debt of a company with a view to taking a larger equity stake under conditions that are favourable to the private equity firm.
Once invested, private equity firms will often engage in a follow-on investment to facilitate further growth of the business or an acquisition, or to improve a weakening balance sheet. Private equity firms will also often recapitalise the business after a period of time by releveraging the company and taking out invested funds. These payments, once made to the private equity firm, can be paid out to the private equity firm's investors, deployed by the private equity firm in other transactions or redirected to other portfolio companies.
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Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through — Private Equity 2014, (published in February 2014; contributing editors: Casey Cogut and William Curbow of Simpson Thacher & Bartlett LLP). For further information please visit GettingTheDealThrough.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
