Jurisdiction(s):
United Kingdom

Related legal acts

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...

UK Private Equity Funds: Structures, Limited Partnership Agreements, Fees and Carried Interest, Marketing and AIFMD/FCA Regulation, with ECCTA 2023 Changes and Forthcoming AIFM Reforms

Published by a LexisNexis Financial Services expert

Practice notes

This Practice Note summarises the principal characteristics of collective investment vehicles that target unlisted (including public‑to‑private) companies. It covers tax issues, fund structure and documentation, the fund life cycle, fee and carried interest arrangements, and the relevant UK regulatory framework.

What is a private equity fund?

A private equity fund (PE fund) is a pooled investment arrangement focused mainly on unquoted securities. Chances to invest in these assets, commonly shares in private limited companies, are seldom publicised and are usually sourced and negotiated privately. Accordingly, investors outside the private equity market struggle to obtain direct access. By combining their capital in a professionally managed PE fund, investors can participate in these opportunities.

Inward investment by a PE fund can appeal to investee businesses because PE funds:

provide growth capital to portfolio businesses;
support transactions that take securities from public markets into private ownership;
help revive insolvent or financially distressed companies where restructuring or rationalisation may restore profitability

...

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Web page updated on 22/05/2026

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