Private Equity Funding process (Brief):

Private Equity or Venture Capital funding is Buzz word now. With the success of various funded projects both PE\VC funds and Companies looking for Funds are looking for growth and expansion via this route.

Why is this information essential for me?

Whether you are a member of finance and accounting team, an entrepreneur, a PE consultant or just interested in getting knowledge, knowing this process will be of great help.

What do we mean by Private Equity?

In simple words it (P.E. fund) is a company that invests in your company, provide you with much needed funds for set-up, expansion or diversification. It will stay invested and once your company makes profit and valuations are strong, it will make an exit i.e. sell of its investment and make profits.

Sounds interesting and exciting, but wait!!!!

 Raising funds is not that easy, to understand this we need to step into the shoes of PE fund and answer these questions:

1)   Why shall I invest my money in particular company ?

Answer: Definitely for profit. 

2)How much profit I expect?

Answer: Definitely more than what I can earn from other investments.

3)Will I invest in every project that comes to me .

Answer: No, I will invest only in the most profitable project.

And you may even look for other qualities like entry barrier, innovation, future viability etc.

Thus, you yourself gave the answer as to what qualities your project should have to get funding.

The process:

1. Deciding as to whether we should go for PE funding.
2. Preparing a Business plan
3. Deciding on and contacting a P.E. fund that suites our need
4. Presentation of business plan and initial negotiations
5. Business valuation
6. PE fund approves the plan and gives its consent for further processes
7.  Due-diligence
8. Final negotiations
9. Signing the agreement

This process is time consuming and requires around 6 to 12 months for completion.

This blog is a part of series of blogs related to P.E. funding.

Will be coming up with each process in much details, don`t forget to go through these forth coming blogs.

Any queries, suggestions or advice contact : info@adhauassociates.co.in