Private Equity Deal Structuring

A private equity investor is looking to deploy flexibility in deal structuring, because it will give him a competitive advantage over other, more constrained investors. We can think of a private equity deal structure as being made up from components of a menu of both financial and non financial instruments. We have ordinary shares, which can be either a small minority, an influential minority; or a majority. We have preference shares, which are much more customisable than ordinary shares. Non financial instruments include board seats, veto rights and ratchet mechanisms. Reporting requirements and enforcement mechanisms are also important.