What private equity actually is
A private equity firm raises a fund from institutional investors — pension funds, insurers, development finance institutions, family offices — and deploys it by buying meaningful stakes in private companies. The firm typically holds each investment for three to seven years, works actively to grow profits, and then exits by selling to another investor, a strategic buyer, or the public market. Unlike a bank, a PE firm is buying a share of your future, not lending against your present. Unlike a government grant, the money comes with a demanding shareholder attached.
The three transaction types
The firm buys a minority or significant stake and the money goes into the business to fund expansion, acquisitions or working capital.
The firm (often with management) acquires a controlling stake; founders take money off the table, partially or fully.
The firm buys out an exiting shareholder, or structures a B-BBEE ownership deal that brings credentialed black investors in alongside funding.
What makes a business fundable
South African PE firms see hundreds of opportunities a year and complete a handful. Across the industry, the businesses that get funded share a recognisable profile:
If your business depends entirely on you, has unaudited financials, or cannot show at least two to three years of profitable trading, you are not yet a PE candidate — you are a candidate for DFI and grant funding. Fix the fundamentals first; PE capital rewards preparation, not urgency.
