private-equity
Private equity is professionally managed capital that acquires private (or taken-private) companies, improves them, and sells them. The classic vehicle is a closed-end fund using committed capital from limited partners, often with leverage on control deals.
Private equity in the Invest Europe sense is the industry of funds that buy companies, hold them for a period, and exit. The GP calls committed capital from LPs (institutional investors, pensions, insurers, funds of funds, some family capital). Professional standards and ILPA principles describe how that relationship is supposed to work. IPEV and IVS speak to how positions are valued between entry and exit.
Strategies include buyout (control, often leveraged), growth equity, distressed, and secondaries. Venture capital is adjacent and sometimes grouped under “private capital,” but the risk and instruments differ.
They underwrite entry enterprise value, leverage, a hold-period plan, and an exit multiple. Financial due diligence and commercial due diligence are not optional. They are a financial buyer unless a portfolio company is the actual acquirer.
Entry EV €80m, €35m of new debt, €45m equity cheque from the fund. Hold five years, grow EBITDA from €10m to €14m, exit at a similar multiple. Equity value at exit depends as much on debt paydown and multiple as on growth. That arithmetic is why PE is not “the same as a strategic.”
Owners care about price, management equity, and cultural fit. LPs care about DPI, TVPI, fees and whether the GP is following the mandate they signed. The company sits in the middle of someone else’s fund life.
Treating every PE firm as interchangeable. Ignoring that a fund in year six cannot underwrite a seven-year transformation. Assuming PE always means maximum leverage.
PE is not permanent capital in the corporate sense. It is also not a public-market valuation every day, even though IPEV requires periodic fair value.
PE processes reward companies that can produce a deal-basis earnings object and a room that does not waste the 100-day clock. Matching to the right strategy — buyout versus growth — matters as much as the CIM.