Private Equity Buyouts in SME’s

Private Equity Buyouts: SMEs vs £50M+ Companies

Private equity (PE) buyouts have long been a powerful strategy for growth, consolidation, and unlocking value—especially for individual sellers. But not all buyouts are the same. Multiples vary depending on the sector and the specific business. This process is as much an art as it is a science. For the acquirer, it’s an investment. For the seller, it could represent a lifetime of work.

1. Structure and Strategy

For SMEs, buyouts are often management-led (MBOs), and this can be the most suitable route for sellers. Other common buyers include strategic acquirers, search funds, or private individuals. The goal is typically to professionalise the business, implement better systems, and unlock growth potential. These deals are usually more hands-on, with the PE fund deeply involved in strategy, operations, and leadership development.

2. Risk and Reward

At Madison Carter Finance, managing risk is critical. We evaluate not just the financials, but also the character and culture of the business. We aim to structure deals where both seller and buyer can win.

Smaller companies with limited revenue and staff often pose higher risks. While we sometimes explore these, we prefer larger targets. Though more expensive and competitive, larger businesses are generally seen as lower risk. They tend to have predictable cash flows, strong governance, and operational resilience. While the returns may be lower in percentage terms, they typically offer greater long-term stability.