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Private-Equity Minority Investments
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Private-Equity Minority Investments

Can Less Be More?

Antoon Schneider and Cristina Henrik
Boston Consulting Group, 2015
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Editorial Rating

8

Qualities

  • Innovative
  • Applicable

Recommendation

Taking a minority shareholding is becoming more common for large private equity (PE) funds, according to Boston Consulting Group professionals Antoon Schneider and Cristina Henrik. As PE firms seek to deploy roughly $1.2 trillion of uninvested capital, they’re more open to atypical deals, while sellers like the control they retain and the know-how they gain from minority investors. However, PE funds need to do their homework to ensure the success of their minority stakes. getAbstract recommends this study’s insights on this little-reported phenomenon to private equity investors as well as to companies considering working with them.

Take-Aways

  • Large private equity (PE) funds are increasingly taking minority stakes in target companies. Since 2008, the proportion of deals involving minority investments has averaged 27%, compared to 13% between 2004 and 2007.
  • Sellers have three needs in selling a minority interest: capital, a minority investor’s know-how and the enhanced market standing an outside investor brings to a company.
  • For their part, PE investors will cede control in a minority holding because they can compete on factors other than price.

About the Authors

Antoon Schneider is a managing director at the Boston Consulting Group, where Cristina Henrik is a principal.

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