13 - Exits

Summary

Introduction

In this final chapter, we turn to look at some of the issues that arise on a successful exit by the investors from a private-equity-backed company. We will concentrate on two types of transaction in particular: a share sale; and an Initial Public Offering (IPO).

In relation to share sales, this chapter will touch on some areas that are relevant to any disposal of a private company. However, the main focus will be on those specific issues that can arise on the sale of a company that is private-equity-backed, and the consequences for each of the parties to the transaction. This approach is consistent with the approach taken in chapter 4, where the specific issues that arise on a share purchase by a private-equity-backed buyer were highlighted; inevitably, many of the areas considered overlap, although the position taken by the buyer and the seller(s) on such issues can be markedly different.

On the face of it, an IPO is a very different transaction to a share sale, not least because of the highly regulated environment in which the transaction is taking place, and the high profile and publicity it attracts. However, many of the same features and commercial concerns for the private equity investors and managers can arise, and it is informative to see how these consistent issues are addressed in the two different exit transactions.