Private equity buyouts: overview

by David Carter, Ashurst, Simon Beddow and Alex Lewis, formerly of Ashurst and updated by Practical Law Corporate.

A practice note providing an overview of the principal features of a typical private equity buyout in the UK. This note examines transactions where a private equity investor acquires a majority equity stake in a target company, usually alongside a management team. It outlines the typical acquisition and financial structures, including the mix of debt and equity finance, and the priority of repayment on exit. The note also identifies the key parties and advisers involved in a buyout, and walks through the usual process. It discusses the key legal documents required for the acquisition, equity, and debt components of the deal. Furthermore, this resource explores the distinctions between primary and secondary buyouts, including differing approaches to warranties, indemnities, and the locked box mechanism. It also touches on critical tax considerations, Environmental, Social, and Governance (ESG) factors, and the national security and investment control regime under the National Security and Investment Act 2021.