1 - An introduction to private equity

Summary

Introduction

In this chapter we aim to provide a general introduction to private equity as it has been practised in the United Kingdom in the period up to January 2009. We will introduce some of the key players that shape the market and the types of deals that they do. This chapter will help to explain how private equity evolved into what it is today and will look at some of the factors that may influence its future. It is designed to set the scene for much of the rest of this book, and to give to the reader who is less familiar with the sector a welcome overview of a typical deal and some of the bigger issues in the private equity marketplace generally, but with a particular focus on the UK mid-market.

Industry terminology exists in all markets and has its place as shorthand for those familiar with the territory. Ever more colourful and elaborate phrases and acronyms are coined. In the private equity market they have (or once had) distinct and separate meanings and nuances. Many are now merging and being used inconsistently, creating an aura of spin and shimmer around the sector, and meaning different things to different people. We will seek to demystify some of the features of the market and the jargon used by practitioners and commentators alike.