In this episode of US-UK Tax Talk, host Aidan Grant is joined by his Collyer Bristow colleague Ragavan Arunachalam, Partner and Head of Private Equity, for an insightful discussion on private equity, corporate acquisitions and the dealmaking process.

Aidan and Ragavan explore the fundamentals of private equity, how it differs from venture capital, and why private equity investors continue to view the UK market as an attractive destination for investment. They discuss how transactions are structured, the role of debt and equity financing, and why the alignment of investors and management teams is often as important as the capital itself.

The conversation also takes listeners through the key stages of a private equity transaction, from heads of terms and due diligence through to disclosure, deal documentation and completion. Drawing on more than 20 years of experience, Ragavan shares practical insights into what makes deals successful and why preparation, relationships and clear alignment of interests are critical throughout the process.

Join us on the first Wednesday of every month for a new episode of the US-UK Tax Talk podcast, brought to you by Collyer Bristow. Watch recent episodes on Collyer Bristow’s YouTube channel, and connect with our team for further insights.

Key Takeaways

What is private equity and how does it differ from venture capital?

Private equity generally focuses on investing in established, revenue-generating businesses, whereas venture capital tends to target earlier-stage companies seeking funding to develop products, build market share or accelerate growth.

Why are private equity investors attracted to UK businesses?

Many investors view the UK as offering attractive valuations relative to other markets. This creates opportunities to acquire strong businesses with significant growth potential and allows investment capital to go further.

Why do private equity firms use debt financing?

Debt financing enables investors to leverage their capital and spread risk across multiple investments. Combining debt with equity allows buyers to pursue larger acquisitions while preserving capital for future opportunities.

What does due diligence involve?

Due diligence involves reviewing a target company’s legal, financial, commercial and operational position. The process helps buyers identify risks, validate assumptions and assess opportunities to create value following an acquisition.

What is the purpose of disclosure?

Disclosure enables sellers to identify exceptions to the warranties provided in the sale agreement. By sharing known issues with buyers, disclosure helps allocate risk appropriately and reduces the potential for disputes after completion.

Why is alignment between investors and management so important?

Successful private equity transactions depend on aligning the interests of investors, management teams and sellers. Equity participation and performance incentives help ensure that all parties are working towards the same long-term objectives and eventual exit strategy.