(Buy and) Build Me Up Buttercup: Introducing PE Investment Structures

In a typical private equity (PE) M&A transaction, a PE fund acquires a controlling or significant minority stake in the equity securities of a privately held target company (referred to as a portfolio company once acquired), with the goal of improving the financial condition of the portfolio company and selling it at a premium within a short period of time. This practice note focuses on the issues related to making investments in privately held targets, and covers the following elements of private equity transactions: the structure of PE investments, configuring management incentives, negotiating control and liquidity rights, financing PE investments, capital structures of PE portfolio companies, and exiting a portfolio investment.

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Related Content

• Buy and Build Strategies in Private Equity
  Read this in-depth discussion of the buy and build private equity strategy, including elements of a successful buy and build investment program. 
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  Consult this annotated form that evidences a private equity sponsor’s commitment to provide equity financing to fund an acquisition.
• Private Equity Financing Provisions
  Review these sample provisions used in acquisition agreements where a private equity buyer provides representations and warranties and related covenants regarding its financing commitment.

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