Raise Private Equity

Raising Private Equity for Your Business

Raising private equity is one of the most significant decisions a business owner will make. Done well, it accelerates growth, brings strategic support and industry contacts, and creates a defined path to realising the value that years of building a business have created. Done without adequate preparation, it is a process that consumes management time, damages valuation, and in some cases fails at the point of financial due diligence — leaving the business exposed and the opportunity cost of a failed process significant.

The single most important thing a business can do to improve the outcome of a PE raise is to ensure the finance function is genuinely investor ready before the process begins. That means a qualified CFO or Finance Director who has been through a PE raise before, management accounts that meet the standard institutional investors expect, a financial model that can withstand detailed scrutiny, and an EBITDA presentation that is clean, normalised, and proactively documented rather than discovered and contested during due diligence.

FD Capital places CFOs and Finance Directors specifically for the PE fundraising process — on fractional, interim, and permanent bases depending on the stage of the business and the timeline of the raise. Our team has placed finance executives for businesses across the UK private equity market from seed-stage EIS raises through to mid-market PE transactions and MBOs. Call 020 3287 9501 or email recruitment@fdcapital.co.uk to discuss your PE raise and what finance leadership you need to support it.

“FD Capital has supported SBS Insurance Services over the past three years through the provision of a Fractional FD/CFO. Their expertise has made a significant difference in professionalising our finance function and delivering accurate, timely management information — exactly what our business needed to grow with confidence.”

— Tracey Rees, COO, SBS Insurance Services Ltd

How to Raise Private Equity: The Process in Practice

The PE fundraising process for a UK business typically follows a defined sequence, and understanding each stage helps owners and management teams prepare effectively. The stages are not always linear — competitive processes and bilateral negotiations have different dynamics — but the financial management demands at each stage are consistent.

Stage 1: Preparation — getting the business investment ready

The preparation phase is where the most value is created or lost. Most businesses approach PE investors before they are genuinely ready, and the gap between the financial information they can provide and the standard investors expect is both visible and costly. A business that arrives at investor conversations with twelve months of consistent, investor-grade management accounts, a well-constructed three-statement financial model, a clearly documented normalised EBITDA, and a data room that is ready for due diligence will command a materially higher valuation than one that scrambles to produce this information during the process.

The preparation phase is where FD Capital’s fractional CFO appointments are most impactful. A fractional CFO working two to three days per week for six to eighteen months before a planned raise implements the management accounts process, builds the financial model, identifies and resolves compliance issues, and develops the financial narrative that the information memorandum will be built on. The cost of this engagement is almost always recovered many times over in the improved valuation outcome. See our comprehensive guide to preparing for private equity investment and our investor-ready CFO page for detail on the preparation framework.

Stage 2: Appointing a corporate finance adviser

For most PE raises above £5m, engaging a specialist corporate finance adviser is essential. The adviser runs the competitive process — preparing the information memorandum, identifying and approaching suitable PE investors, managing the data room, and negotiating the deal terms. The quality of the financial information that the CFO provides directly determines the quality of the process the adviser can run.

Corporate finance advisers for UK PE transactions include specialist M&A boutiques and the corporate finance arms of accountancy firms across the size spectrum — from regional practices handling small-cap transactions to international advisory firms managing mid-market processes. The CFO works in close partnership with the corporate finance adviser throughout the process, and a finance executive who has worked alongside corporate finance advisers in previous transactions understands what is needed and can deliver it at the pace the process requires.

Stage 3: The information memorandum and investor approach

The information memorandum — the primary document used to market the investment opportunity to PE investors — has a substantial financial section for which the CFO is responsible. This includes: the historical financial analysis, presenting at least three years of management accounts in a clear and consistent format; the financial model, showing the projections for the three-to-five-year investment period; the EBITDA bridge, normalising the reported EBITDA to the underlying earnings power of the business; and the financial narrative, explaining the key drivers of financial performance and the commercial logic of the growth plan.

A well-constructed financial section of an information memorandum is a significant competitive advantage in a PE process. Investors who receive clear, credible, well-documented financial information have more confidence in the business and are more likely to bid competitively. Investors who receive unclear, inconsistent, or inadequately documented financial information raise concerns, apply price discounts for perceived risk, or withdraw from the process.

Stage 4: Management presentations and investor meetings

Once a group of PE investors has reviewed the information memorandum and expressed interest, the management team presents to each investor directly. The CFO presents the financial section — the model, the EBITDA, the working capital dynamics — and fields detailed questions from the investor’s team. This is one of the highest-stakes moments in the PE process: a CFO who presents with clarity, handles questions with composure, and demonstrates command of the financial detail contributes materially to investor confidence. A CFO who is uncertain or defensive under questioning damages it.

Stage 5: Due diligence — financial, commercial, legal, and tax

Following management presentations, preferred investors move to detailed due diligence. Financial due diligence — conducted by an independent accountancy firm appointed by the investor — examines the management accounts in detail, tests the EBITDA normalisation adjustments, analyses the working capital dynamics, reviews the financial controls, and assesses the quality of the financial model. This process typically takes six to ten weeks and generates a significant volume of queries that the CFO must respond to accurately and quickly.

Vendor due diligence — where the seller appoints their own FDD team to produce a report that is shared with all bidders — is increasingly standard in competitive processes. A well-managed VDD process, run by the CFO, allows the seller to present the financial information on their own terms and reduces the volume of bidder queries. The quality of the CFO’s engagement with the VDD team directly affects the tone and conclusions of the VDD report.

Stage 6: Deal negotiation and completion

Once due diligence is complete and a preferred investor selected, the transaction moves to final negotiation and documentation. The CFO is involved in several specific financial aspects of this stage: the working capital mechanism — agreeing the working capital target and the completion accounts or locked box mechanism that will be used to measure it; the financial warranties and indemnities — understanding the financial representations being made and their implications; and the financial aspects of the management equity arrangement, including sweet equity structures for management team members participating in the deal. See our sweet equity guide for detail on management equity in PE transactions.

What PE Investors Are Looking For When You Approach Them

Understanding what PE investors assess when they evaluate a business seeking investment helps owners present their company most effectively. The assessment goes well beyond the financial model and information memorandum — it encompasses every interaction with the management team and every piece of financial information exchanged during the process.

EBITDA quality and normalisation

PE investors value EBITDA multiples to determine enterprise value. The normalised EBITDA — the underlying sustainable earnings power of the business after removing owner benefits, one-off costs, and other distortions — is the number they build the valuation on. A business that can present and defend a well-documented EBITDA normalisation will typically achieve a better valuation than one where the adjustments are unclear or contested. At a 6x EBITDA multiple, a £200,000 difference in the agreed normalised EBITDA represents £1.2m of enterprise value. The CFO’s EBITDA presentation is direct financial value creation. See our EBITDA guide and increasing business valuation with a CFO page for the mechanics.

Management accounts quality

PE investors need twelve to twenty-four months of management accounts to understand the business’s financial history and assess the quality of the finance function. Accounts produced monthly, within ten working days of month-end, in a consistent format, are what investors expect. Late, inconsistent, or analytically thin management accounts signal financial management weakness and invite additional due diligence scrutiny that consumes time and damages confidence. See our management accounts guide for the format and content that investors require.

Finance function capability

Investors are assessing not just the business’s financial performance but the capability of the finance team to deliver the reporting and analytical requirements of the post-investment period. A finance function led by a qualified, PE-experienced CFO who clearly commands the financial detail of the business will attract more confidence — and often a higher multiple — than one led by a financial controller or finance manager who has not previously operated in a PE-backed environment.

Financial model credibility

The financial model is the quantitative expression of the investment case. Investors will interrogate it in detail — testing the assumptions, running their own scenarios, and assessing whether the projected EBITDA growth is commercially coherent. A model built by an experienced CFO who has constructed financial models for previous PE transactions will withstand this scrutiny better than one built by the CEO or a junior finance team member. See our financial modelling guide for the standard required.

The Finance Director’s Role in Raising Private Equity

The Finance Director or CFO is the business owner’s most important ally in a PE raise. Their contributions span the full process from preparation through to completion — and the quality of those contributions directly affects whether the raise succeeds, how quickly it completes, and what valuation is achieved.

Before the process: investor readiness

In the six to eighteen months before a planned PE raise, the FD or CFO leads the investor readiness programme: implementing management accounts improvements, building the financial model, conducting an internal compliance review, and preparing the data room. A business that arrives at the formal process with all of this in place is at a significant advantage over one that attempts to build it during the process under time pressure. See our investor-ready CFO page for the full preparation framework.

During the process: financial project management

During the active PE process, the CFO manages the financial work streams — completing the information memorandum financial sections, managing the VDD process, responding to due diligence queries, maintaining the data room, updating the financial model as assumptions change, and presenting at investor meetings — while simultaneously maintaining the day-to-day financial management of the business. This is an intensive period that typically requires full-time commitment from the CFO. For businesses that rely on a fractional CFO for the preparation phase, transitioning to an interim full-time appointment for the active process period is a common and effective approach.

Working capital and negotiation

The working capital mechanism — the financial adjustment that reconciles the agreed working capital target at the point of deal completion — is one of the most financially significant deal terms and one that is frequently poorly managed by sellers who lack experienced transaction CFO support. A CFO who understands the working capital mechanism, who has managed the business’s working capital carefully in the months before completion, and who can negotiate the mechanism from a position of financial knowledge will protect meaningful value at the completion stage. Conversely, a business without experienced CFO support on working capital can face a significant post-completion price adjustment that reduces the proceeds received.

“Adrian worked with us as our Fractional CFO for six months and we are genuinely grateful for the contribution he made. His financial expertise and calm, professional approach gave us confidence in our numbers and supported better decision-making across the business. I would recommend Adrian and FD Capital without hesitation.”

— Josh Haugh, MAS Technicae Group (International) Ltd, West Sussex

Choosing the Right Type of PE Investment for Your Business

Not all PE investment is the same, and different types of PE investment have different implications for the business, the management team, and the finance function. Understanding the distinctions helps business owners approach the right investors and prepare for the right type of investment relationship.

Growth capital

Growth capital is the most common first PE investment for profitable, owner-managed businesses. The PE house acquires a minority or majority stake — without the use of debt — to fund the acceleration of an existing growth strategy. The Business Growth Fund (BGF) is the UK’s most active growth capital investor, providing £1m–£10m of growth capital to businesses with revenues of £5m–£100m and not requiring majority control. Growth capital is typically the least disruptive PE investment type and the most common first experience of institutional investment for owner-managed businesses.

Leveraged buyout

A leveraged buyout uses a combination of equity and debt — secured against the business’s assets or cash flows — to acquire the business. LBOs are more common in the mid-market and require a CFO with specific experience of leveraged financial management: covenant compliance, debt service management, and the disciplines of operating with a leveraged balance sheet. The financial requirements of an LBO CFO are significantly more demanding than those of a growth capital portfolio company.

Management buyout (MBO)

An MBO allows the existing management team to acquire the business from its current owner — typically with PE backing — often as part of a succession event or corporate carve-out. The CFO plays a dual role in an MBO: managing the financial aspects of the acquisition process (financial model, due diligence, debt structuring) while simultaneously participating as a member of the acquiring management team. Management equity arrangements — sweet equity structures that give the team a disproportionate share of the exit return if performance targets are met — are a key element of MBO structuring. See our sweet equity guide for detail.

EIS and SEIS raises

For earlier-stage businesses not yet ready for institutional PE, the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) provide a structured route to angel and family office investment with significant tax incentives for investors. The CFO’s role in an EIS or SEIS raise includes managing the HMRC advance assurance process, producing the financial projections that support the application, and managing the ongoing compliance obligations during the three-year investment period. See our EIS and SEIS fundraising guide for comprehensive detail.

How FD Capital Supports PE Fundraising

FD Capital’s support for businesses raising PE capital operates on two levels: supply of the right CFO or Finance Director for the process, and advisory guidance on the preparation and process management that enables the CFO to be most effective.

Our team recruits CFOs and Finance Directors who have direct experience of the PE fundraising process — not advisory experience or theoretical familiarity with private equity, but having held the CFO or Finance Director role in a business that went through a PE process and having managed the financial workstreams personally. We assess candidates specifically on their transaction experience before presenting them for PE fundraising mandates, and we are direct about the difference between a CFO with one PE transaction in their background and one who has managed three or four.

We place across all engagement models — fractional CFOs for the preparation phase, interim CFOs for the intensive active process period, and permanent CFOs for the post-investment period — and we can transition between these models smoothly as the raise progresses. Our placement process is fast: average eight days from brief to shortlist, with initial candidate ideas typically shared within 24 hours for urgent requirements.

See our CFO for fundraising, investor-ready CFO, and how to prepare for private equity pages for the full context of our PE fundraising support.

PE Fundraising CFO: Rate and Salary Guide

See our CFO salary guide and fractional CFO cost guide for full UK market benchmarking.

Frequently Asked Questions

How long does it take to raise private equity?

From initial investor conversations to completion, most PE processes take four to nine months. A well-prepared, competitive process with multiple bidders tends to be faster than a poorly prepared bilateral negotiation — the clarity and credibility of the financial information significantly affects the pace of due diligence. Starting the preparation process twelve to eighteen months before the target completion date gives the business the best chance of completing on schedule and at the best available valuation.

Do we need a CFO to raise private equity?

In practice, yes. PE investors will assess the finance function during their evaluation and will require a qualified CFO post-investment as a matter of course. Many PE houses make the appointment a formal condition of the deal. Appointing a CFO before the process begins — using a fractional or part-time engagement if cost is a constraint — is significantly more effective than making the appointment reactively under investor pressure. See our CFO as a condition of PE investment page for the scenario where this becomes urgent.

How do we find the right PE investor for our business?

The right PE investor depends on the size of the business (enterprise value), the sector, and the type of PE investment required (growth capital, buyout, venture). The BVCA’s member directory is the most comprehensive publicly available resource for identifying active UK PE investors. A specialist corporate finance adviser with sector and deal-size expertise is the most effective route to accessing the right investors and running a competitive process. See our guide to the UK private equity landscape for an overview of the market segmentation.

What is the typical PE investor equity stake?

Majority PE acquisitions (LBOs and MBOs) typically involve the PE house acquiring 60–80% of the equity, with the management team retaining the balance through co-investment and sweet equity arrangements. Minority growth capital investments can range from 20% to 49% depending on the investor’s preferences and the capital required relative to the business’s valuation. The specific equity structure — including liquidation preferences, anti-dilution rights, and management ratchets — is negotiated in the shareholder agreement and has significant implications for the management team’s eventual financial outcome.

What multiple can we expect on our EBITDA?

EBITDA multiples in UK PE transactions vary by sector, deal size, and quality of earnings. As a broad guide, small-cap transactions trade at 4–7x EBITDA, lower mid-market at 6–9x, and mid-market at 8–13x for high-quality businesses in attractive sectors. Technology and SaaS businesses with recurring revenue can command premium multiples above these ranges. The multiple achieved for any specific business depends heavily on the quality of the financial presentation, the competitiveness of the process, and the credibility of the management team — all of which the CFO directly influences. See our increasing business valuation with a CFO page for detail on how CFO-led improvements affect the multiple achieved.

Related Services

How to Prepare for Private Equity Investment | CFO as a Condition of Investment | Investor Ready CFO | CFO for Fundraising | PE House CFO Recruitment | Series A CFO | CFO for Business Sale | Increasing Business Valuation with a CFO | Fractional CFO | Interim CFO | What is Private Equity? | CFO Recruitment for PE-Backed Businesses | Recruiting a CFO with PE Experience | Private Equity Finance Director | M&A CFO | EIS and SEIS Fundraising | EBITDA Guide | Sweet Equity Guide | Financial Modelling Guide | Transformation CFO & FD