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...

Structuring UK private equity buyouts: share versus asset acquisitions, auction sale processes, capital structures and key tax considerations

Published by a LexisNexis Corporate expert

Practice notes

This Practice Note is part of the Lexis+® UK Corporate private equity buyout transaction toolkit

At the outset of a private equity buyout (MBO), beyond price and equity stakes, the key question for the parties and their advisers is the deal structure. In most cases, a newly formed company established by the investor (a newco) will either:

purchase all of the issued share capital of the target (a share purchase), or
acquire the business as a going concern together with certain assets (an asset purchase).

On completion, the investors and the managers (ie management members of the target company/business) will subscribe for their respective equity interests in the newco, or in a holding company of the newco, depending on the proposed equity structure. See Practice Notes: Structure of a buy-out and Stages of a buy-out.

Another fundamental point at the beginning is whether the seller and target management are in discussions with only one investor, or whether approaches from several interested parties are being considered as part of an auction sale process. Running an MBO through an auction will entail a different process and timetable from a standard transaction with just a single potential investor...

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Web page updated on 22/05/2026

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