Banque Cantonale de Geneve : Finance the external growth of a company with private equity

Many sectors of industry and commerce have reached a level of maturity that hinders the organic growth of companies. External growth may become imperative. Some SMEs therefore decide to acquire another company in order to expand and consolidate their position in certain markets. Private equity is an excellent option for financing such a project.

How does private equity work?

This English term refers to an equity investment in unlisted companies. Private equity experts assist company directors by reinforcing the buyer's capital base during external growth. In particular, they provide optimal purchase conditions and ensure that the integration goes smoothly.

Why choose private equity?

Financing a company takeover with the help of private equity increases the financial strength and financial flexibility of a company. This in turn enables the company to expand and remain competitive. Due to its liquidity reserves, the company has greater room for manoeuvre and is at the same time protected against the risk of rising interest rates, which would expose it to acquisition were it financed by debt.

A true partnership

The venture capitalist provides the company director with his expertise in the area of company acquisitions. He will oversee the due diligence, structure the transaction, and assist in the negotiation of the contract. Post-acquisition, he can also offer the company director tools for integrating the acquired company and for adapting governance to the size and needs of the new entity. Having a financial investor present allows the company director to concentrate on managing his company.

It guarantees the creation of value for all shareholders. It is a win-win partnership for both parties.

Capital Transmission SA is a wholly owned subsidiary of the Banque Cantonale de Genève with offices in Geneva and Zurich. It has specialised in private equity transactions in Switzerland and Europe since 2008 Its team assists company directors in their expansion projects from a turnover of CHF 5 million, regardless of the sector of business activity. 'Capital Transmission SA accompanies SMEs without interfering in their management, in the role of minority shareholder, without a seat on the board of directors,' explains Frédéric Tixier, Managing Director.

Greater resilience

In conclusion, SMEs backed by private equity firms prove to be more resilient than their peers in times of crisis. This type of financing is also very well suited for business transfers, particularly for management.

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