Private lenders
Private equity lenders specialise in the provision of private equity investment funds to businesses with the potential for high growth. They are interested in working with unquoted companies who can offer them a high return on their investment within a 2 - 10 year period. Private lenders will commit to a program of investment in exchange for an equity share of the company and an exit strategy, wherein their share of the company or the company as a whole is sold in order to release the principal private fund invested along with the investment profit.
For private lenders investing in a business is of course not without its risks. To minimise the risk, lenders will select only businesses with a solid concept that are supported by a well-worked business plan and backed by committed people who are ambitious enough to succeed. Even then, if the idea is not unique enough to interest private lenders or does not fit with lenders' business criteria then they may choose not to invest. If you're in the market for private equity funding and are looking for private lenders to approach then it really does pay to do your homework beforehand to maximise your chances of success.
Types of private lenders
It is also worth noting that not all private lenders are alike. Some lenders specialise only in start-up businesses, others may be concerned only with companies that have a certain level of turnover, or are ripe for a management buy-out. There are even some private equity lenders that will deal with businesses in all stages of development, right through from seed to rescue / turnaround packages for businesses in receivership, but confine themselves only to a specific industry sector.
Given that private equity lenders cater for such diverse markets businesses will find their chances of obtaining private equity investment greatly enhanced if they target lenders before making their approach. This will not only save time in finding the right investor, but also allows the business plan to be more tightly focused on the requirements of the private lender.
The business plan itself should be tweaked for each private lender approached. This is essential as by incorporating into the plan what a particular private lender wants to see in a plan, then you're stacking the odds in your favour of receiving the funds that you need. To do this you will of course need to do some in-depth research about the lenders on your shortlist. Find out what their investment preferences are and how they operate. A lot of this information can be picked up from analysing the types of companies that the lenders have already invested in.