The Real-World Effects Of Private Equity Investment In An Organisation

In this panel discussion, expert panellists share their insights on the key fundamentals of private equity. You’ll learn what private equity is and how it differs from other forms of investment.

I'm excited to share our latest resource for finance leaders navigating the complex world of private equity.

Datel’s Incremental Edge is a platform to support our CFO community and we've brought together an exceptional panel of experts to discuss the different stages of private equity, the challenges CFOs face in their role and how to overcome them.

Our fantastic panel offers practical and trusted advice derived from years of experience working with private equity firms, you will learn first-hand what to expect when starting out on your PE journey, and the steps you can take to navigate your way through the investment process

In our first episode of the Incremental Edge private equity series, we shine a spotlight onto the key questions first-time PE CFO’s and finance leaders want to know the answers to. These essential insights lift the lid on what private equity is, how it differs from other forms of investment types, and which businesses typically attract investment.

What to expect from the episode

🟥 The three stages of private equity investment

Private equity is about investing in non-listed businesses with the goal of expanding their value over time. While every deal is unique, PE investments generally fall into three key stages, each serving a different purpose in a company’s growth journey.

1. Venture Capital – This is early-stage investment, providing funding to start-ups and high-growth businesses that need capital to develop their product, scale operations, or establish their market presence.

2. Growth Equity – When a business is more established but needs additional capital to accelerate expansion, whether through product development, market entry, or acquisitions. Growth equity provides the necessary funding while allowing existing owners to retain control.

3. Buyouts – In this scenario, a PE firm takes a majority stake in a business, often bringing in operational expertise and strategic direction to significantly increase value over the ownership period.

Each stage represents a different approach to investment, but the goal remains the same, to drive business growth and maximise returns over time.

🟥 Where private equity firms are investing: Key sectors

Private equity investment is driven by high-growth potential, and while firms invest across a range of industries, some sectors consistently attract the most attention. Technology, healthcare, and business services are currently seeing significant PE activity due to their scalability, strong margins, and resilience.

That said, PE investment isn’t limited to these industries. Specialised funds, such as consumer product-focused investors, are also active—especially in regions like the North West, where firms like River Capital target smaller businesses that might not traditionally fit the PE mould.

Across all sectors, the common denominator is growth. PE firms seek businesses on a steep upward trajectory, with strong margins and the potential to accelerate even further with the right capital and expertise. The goal is simple: to inject funding that supercharges expansion and delivers significant returns.

🟥 The structure of a PE investment

When a PE firm invests, it’s not just the firm injecting funds into the business, management teams often receive equity stakes, aligning their incentives with business growth. At the same time, existing shareholders face a strategic choice - cash out or reinvest into the new structure. This flexibility depends on the deal type:

• Management Buyout (MBO): The management team acquires the business from existing shareholders, often with PE backing.

• Growth Equity Investment: A PE firm injects capital into a business to fund expansion, such as launching new technology or executing a buy-and-build strategy, where multiple businesses are acquired and consolidated to create a stronger, larger entity.

🟥 Why private equity firms invest

PE firms aren’t just looking for any business, they want businesses with clear scalability, strong leadership, and a compelling growth plan. Whether it's developing a new product or expanding through acquisitions, the key is demonstrating a strategy that can deliver a significant return within the investment cycle.

For businesses considering PE investment, the message is clear: be ready to show not just where you are today, but where you can go with the right capital and expertise.

🟥 A partnership for growth

For many businesses, the idea of private equity investment can come with apprehension or misconceptions. There’s often a perception that PE firms prioritise aggressive growth at the expense of stability. In reality, PE investors are not interested in risk, they seek certainty and clarity. Their success depends on ensuring their investment is secure and positioned for sustainable growth.

Engaging with PE isn’t just about meeting reporting requirements or adapting financial metrics, it’s about building a partnership. PE firms bring more than just capital; they offer strategic insights, industry connections, and operational expertise that businesses can leverage. In return, they expect timely, transparent data that enables them to make informed decisions.

Ultimately, PE investment is a shared journey. Both the business and the investors have a common goal—to drive value and achieve growth. While PE firms will push for performance, they are just as invested in success as the management teams who share ownership. When approached as a two-way collaboration, PE can be a powerful catalyst for transformation.

Enjoy the first episode

We hope you enjoy the first episode and gain valuable insights from our panel of industry experts, helping you navigate the PE landscape with confidence.