Private equity provides equity capital to enterprises typically not quoted on a stock market. Private equity can be used to develop new products and technologies, to expand working capital, to make acquisitions, or to strengthen a company’s balance sheet. It can also resolve ownership and management issues – a succession in family-owned companies, or the buy-out or buy-in of a business by experienced managers may be achieved using private equity funding.
Venture capital is, strictly speaking, a subset of private equity and refers to equity investments made for the launch, early development, or expansion of a business. Among different countries, there are variations in what is meant by venture capital and private equity. In Europe, these terms are generally used interchangeably and venture capital thus includes management buy-outs and buy-ins (MBO/MBIs>. This is in contrast to the US, where MBO/MBIs are not classified as venture capital.
This article adopts the European usage which means that references to all related articles to venture capital should be read to include private equity as well.
Every reasonable care has been taken to ensure that the information in this book is correct at the time of compilation. Nevertheless, the publishers can accept no responsibility for errors or omissions, nor for change of details given.
