What is private equity?
Private equity is off-market equity capital: an investment firm provides a company with growth capital and receives company shares in return. The investor's goal is to develop the company over a period of usually four to seven years and then sell its stake (exit).
For mid-market companies, private equity is attractive above all when traditional bank financing is not sufficient or the usual bank collateral has already been exhausted. The drawbacks, however, often only become apparent once the investor is on board.
The drawbacks of private equity that many only recognise late
- Loss of control: The investor secures a say in decisions through advisory board seats, approval rights and reporting obligations.
- Profit participation: At exit, private equity expects returns on equity far above the cost of traditional debt.
- Forced exit: Once the agreed time horizon is reached, a sale is on the table – regardless of the entrepreneur's wishes.
- Cultural break: Especially in family businesses, a financially driven investor noticeably changes the corporate culture.
The ABACUS alternative: liquidity without giving up shares
We provide you with growth capital in the millions – without you having to give up a single company share.
- Assets instead of equity: We finance on the basis of existing assets – by purchasing receivables (factoring) and through sale-and-lease-back for machinery and equipment.
- Intercompany and foreign receivables: ABACUS is one of the few providers to structure the purchase of intercompany and foreign receivables – transnationally, multinationally and with no general country exclusions.
- A complement to your house bank: With our own BaFin licence and a special purpose vehicle (SPV) that is not subject to consolidation, we create off-balance-sheet solutions that complement your house bank – not replace it.
Private equity and ABACUS compared
| Criterion | Private equity | ABACUS |
|---|---|---|
| Form of capital | Equity | Receivables purchase / leasing |
| Company shares | Must be given up | None given up |
| Say in decisions | Yes (advisory board, approval rights) | None |
| Profit participation | Yes, often substantial at exit | None |
| Cost | Expected returns on equity above 15–20% p.a. | approx. 9–10% p.a. all-in |
| Forced exit | Yes, usually after 4–7 years | No, ongoing partnership |
| Volume | Millions | EUR 1–30 million p.a., and more |
| Suited to | Intention to sell within a fixed time horizon | Independent mid-market companies |
Who is ABACUS the right choice for?
- Capital-intensive production or trading companies from the German-speaking upper mid-market, typically with annual revenues between EUR 100 and 300 million
- Internationally oriented, often with foreign subsidiaries and intercompany structures
- Family-run or owner-managed – and determined to stay that way
- Financing requirements of up to EUR 30 million per year and beyond
For anyone who wants to hand over their company with a clear intention to sell, private equity can be the right instrument. Anyone who wants to keep growing while remaining in charge will find ABACUS the structurally better fit.
Why ABACUS and not another provider?
- Successfully in the market for over 10 years
- Owner-managed, independent of corporate interests and free of rigid processes
- Strong institutional framework: our own BaFin licence, audited by RSM Ebner Stolz
- Supervisory board with proven compliance and risk management expertise, including the former head of compliance at Bosch
- Cooperation rather than competition with your house bank: a complement to, not a replacement for, existing financing structures