Last editedMar 20222 min read
If you run a small business, chances are you don’t want it to stay small forever. You’re ambitious, and you have your sights set on growth and expansion. You want to make your brand ubiquitous in your chosen market, expanding to new territories and expanding your offerings. However, this requires funding. And the bigger your company gets, the harder it can be to borrow the capital you need to finance your growth and expansion.
If you need to raise a substantial amount of capital, and you’re looking for an alternative to a conventional business loan, it may be worth reaching out to a private equity firm.
What is a private equity firm and when do I need one?
Private equity firms offer services that provide large sums of capital to growing businesses. This capital comes from a wide range of funds including pension funds, insurance companies, and even sovereign wealth funds. Unlike a conventional business loan, private equity funding is not secured on the company’s assets, nor is it repaid through typical instalments with interest.
Instead, the firm gains an equity stake in the business that typically lasts around two to five years. As the business grows, the value of that stake increases, providing the firm’s return on investment.
Businesses typically use the services of private equity firms when they need to:
Prepare themselves for Initial Public Offering (IPO) and secure the massive funding necessary to go public. The firm will also sell additional shares to the public
Recapitalise, restructuring their debt and equity structure to stabilise their cash flow
Merge with or acquire a former competitor
Here we’ll take a look at the services that private equity firms offer to small businesses like yours before taking a look at some of the world’s biggest in 2022.
The top 5 private equity firms of 2022
Perhaps unsurprisingly, all of the biggest private equity firms in the world are based in the US. Some of the largest and most trusted names in private equity include:
Apollo Global Management
Established in 1990, this New York-based firm specialises in buying distressed companies and managing leveraged buyouts. With around 50% of its investments coming from sovereign wealth funds and public pensions, the firm has raised $24 billion in investments over the past five years, and currently manages $276 billion in assets.
Formerly known as Texas Pacific Group, TPG Capital is based in Fort Worth, with an additional headquarters in Silicon Valley. Needless to say, oil and tech represent the dual pillars of the company’s growth. Since starting out in 1992, TPG has managed more than 175 transactions and raised over $36bn over the past five years.
Kohlberg Kravis Roberts
New York-based KKR has been around since 1976, and is involved in a diverse range of businesses including real estate, credit, and other financial services. It has been involved in some very high-profile leveraged buyouts and currently manages $429 billion in total assets.
The Carlyle Group
Based in Washington DC, the Carlyle Group specialises in real estate, investment solutions, real estate and global credit. With over 600,000 employees, the company manages $429 billion in assets and has raised just over $40bn in the past five years.
The Blackstone Group
The Blackstone Group holds offices in New York, London and other financial hubs around the world. Since it was founded in 1985, it has become the biggest private equity firm in the world, managing assets worth over $648 billion. It has raised an impressive $58.3 billion over the past five years.
In recent years, the bigger firms have been shy of smaller businesses because they represent a greater degree of risk. But that’s not to say that your SME can’t secure funding this way. A financial adviser can guide you towards private equity firms that are a good fit for a business of your size.
We can help
If you’re interested in finding out more about private equity firms, business funding, and managing cash flow, then get in touch with our financial experts. Discover how GoCardless can help you with ad hoc payments or recurring payments.