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...

Exiting UK private equity investments: managing exit planning, trade sales, secondary buy-outs and flotations, deal structures, warranty risk allocation and achieving a clean break

Published by a LexisNexis Corporate expert

Practice notes

The primary appeal of Private equity for Investors and fellow shareholders (including management) is the prospect of realising a notable capital uplift on exit. While income streams during the holding period—dividends on Shares, interest on loan notes and assorted fees—are meaningful to the investor, the true benchmark of success is the capital return. Over the longer term, this is what ultimately defines whether a venture capital or private equity firm has succeeded and its capacity to attract investment into later funds. For further information, see Practice Note: Private equity investment—firms and funds.

Managing the exit

Exit planning starts almost from day one of the private equity investment journey. The likelihood of achieving a successful realisation forms a central part of the investor’s assessment and decision-making. Without a workable exit, the investment will, in all likelihood, be judged a failure. Correspondingly, the Equity documentation for the deal includes provisions that address and govern the exit...

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Web page updated on 21/05/2026

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