Jurisdiction(s):
United Kingdom

Key definition

Private equity definition

What does Private equity mean? Private equity describes investment by professional funds in unlisted (unquoted) companies to obtain minority or controlling stakes, financing growth, management buy-outs/ins, recapitalisations or turnarounds, often alongside acquisition debt. The shares acquired are not admitted to trading on a stock exchange, so are less marketable and less liquid than public (quoted) equity. The term is not defined in legislation or case law; it is a market description used consistently across England & Wales, Scotland, Northern Ireland and Ireland. Transactions are privately negotiated and typically documented through investment and shareholders’ agreements, amended articles, preference shares or loan notes, management incentive arrangements (such as...

Private equity buyouts: drafting and negotiating disclosure letters—general and specific disclosures, disclosure bundles and warranty qualification for buyers, sellers and managers

Published by a LexisNexis Corporate expert

Practice notes

Practice Note

This Practice Note sits within the Lexis+® UK Corporate private equity buyout transaction collection. As part of disclosure, both the seller and the target’s management prepare separate disclosure letters, to be settled and executed at exchange. Although both also pass information about the target to the private equity investor and ultimate buyer, disclosure letters serve a different function from due diligence. They allow the seller and managers to qualify the warranties contained in the warranties schedule to the formal documents, thereby limiting potential liability under those warranties. If, after a buyer alleges a breach of warranty under the share purchase agreement, it can be shown that the matter was disclosed to the buyer in line with the standard of disclosure set out in the formal documents, the buyer’s warranty claim will fail. By contrast, warranties in an investment agreement—typically given by the target’s management—primarily serve to focus the managers’ attention on revealing key information to the investor; that is, the investor will not wish to bring a warranty breach claim against the management team that will run the target company/business post-completion but will want them to...

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Web page updated on 21/05/2026

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