Is Your Business Ready for Private Equity?

On September 9, 2026, Adani Enterprises announced that it had secured agreements to raise approximately US$1 billion from a group of prominent investors including Temasek, Premji Invest, Alpha Wave and funds managed by BlackRock. The investment values the airport business at around US$18 billion, while Adani Enterprises will remain the controlling shareholder. The capital is intended to support expansion, modernisation and the development of airport-linked businesses.

The transaction is a reminder of what institutional capital can do for a business that has already reached significant scale. But another recent Indian story offers a very different lesson. In June 2026, Reuters reported that lenders involved in the long-running BYJU’s dispute were negotiating to acquire roughly 30% of Aakash Educational Services as part of a proposed settlement over unpaid loans and legal disputes. BYJU’s had acquired Aakash in a deal valued at about US$1 billion in 2021, but its stake in the education company was subsequently diluted, with Manipal Health becoming the largest shareholder.

The episode eventually became a complicated battle involving founders, lenders, investors, subsidiaries and courts across several jurisdictions, illustrating how the consequences of financing and expansion decisions can extend far beyond the original transaction.

These are very different businesses and very different transactions. Yet they raise the same question for a growing company. What actually happens when outside institutional capital enters your business?

For years, private equity in India was often seen as something relevant only to large corporations, technology companies and businesses based in Mumbai, Bengaluru or Delhi. That is no longer an accurate picture. India's PE/VC market remains highly active, although investors have become more selective about where they put their money. EY's 2026 India PE/VC Trendbook recorded US$60.7 billion of PE/VC investments across 1,475 deals in 2025, the second-highest investment value on record. Investors have increasingly focused on high-growth, profitable businesses with clear opportunities for scaling, consolidation and value creation.

For a business owner, the question should not simply be whether an investor is willing to invest in the company. The more important question is whether the company is ready to receive that money, and what the business and its founder will have to give in return.

Private Equity Is More Than Lending

At its simplest, private equity involves an investor putting capital into a privately held business in exchange for an ownership interest or other economic rights, with the expectation that the value of that investment will increase over time. But that simple description can hide the most important part of the transaction.

A PE investor is not simply lending money to a company. It is investing in the business and expecting a return. That means the investor will generally want visibility into how the company operates and contractual protections around decisions that could affect the value of its investment. Depending on the transaction, an investor may negotiate board representation, information and inspection rights, restrictions on the transfer of shares, protection against dilution, rights relating to future fundraising and consent rights over certain important business decisions. A founder may continue to hold a majority of the company's shares but still discover that certain decisions cannot be taken without investor approval.

This is where many first-time founders misunderstand private equity. They think in terms of ownership percentage: “I still own 70 per cent, so I still control the business.”

But ownership and control are not always the same thing.

A shareholder agreement can give a minority investor significant influence over important matters. Decisions involving the sale of major assets, substantial borrowing, new share issuances, related-party transactions, changes to the company's business or other reserved matters may be subject to negotiated investor rights.

There is nothing inherently unusual about this. An investor putting substantial capital into a business will naturally want safeguards. The real issue is whether the founder understands those safeguards before signing the transaction documents. The headline valuation may attract the most attention during negotiations, but the rights attached to that valuation may determine how the relationship actually works for years afterwards.

Is Your Business Actually Ready?

A business does not become PE-ready merely because its revenues are growing. Institutional investors generally want to understand what they are investing in. That means examining the company's financial statements, ownership structure, material contracts, regulatory compliance, tax position, intellectual property, employee arrangements, liabilities and pending disputes. This process of due diligence can be particularly revealing for founder-led and family-owned businesses.

Consider a company that has been operating successfully for twenty years. It has loyal customers, healthy revenues and a respected name in its market. But some of its properties are held personally by family members, important loans between relatives have never been formally documented, intellectual property is registered in the founder's name rather than the company, key employees have limited contractual documentation, and major commercial relationships depend heavily on informal understandings.

The business may be commercially successful. But an institutional investor will be interested in ownership and intellectual property rights, undisclosed liabilities and documentation of transactions.  

These questions rarely arise in a founder-funded business, but they become critical once outside capital is involved. Legal due diligence can shape the valuation, the deal terms and even whether the investment goes ahead. For a growing business, these issues are best addressed before approaching investors, not after receiving a term sheet.

The Real Negotiation Begins After the Valuation

Founders often focus solely on valuation. Equally important are questions of who appoints directors, which decisions need investor approval, whether founder or investor can sell their stake, how each side exits, how fundraising affects existing shareholders, and what happens if they disagree. These are settled in the shareholders' agreement, so a PE deal shouldn't be judged on equity percentage alone.

A founder might secure an attractive valuation but restrictive terms, while another offers less money with more freedom. The better deal is the one fully understood, not the bigger number. This matters even more as the company grows, since today's rights become tomorrow's constraints.

The same applies to exits. Investors need a route to a return - a strategic sale, another funding round, an IPO, or selling their stake onward - so that founders must understand not just how an investor enters, but how and when it can leave.

The BYJU’s-Aakash episode demonstrates why ownership can become complicated when a business faces financial stress. BYJU’s originally acquired Aakash for about US$1 billion, but its stake was subsequently diluted, with Manipal Health becoming the largest shareholder. In the proposed 2026 settlement reported by Reuters, lenders were seeking roughly 30% of Aakash as part of a broader settlement of the dispute.

Growth Is Not the Same as Investment-Readiness

Private equity can be transformative for a business. The right investor can provide capital for expansion, support acquisitions, introduce professional expertise and help a founder take a business into markets that may otherwise take years to enter. The recent Adani Airports transaction, involving approximately US$1 billion from institutional investors, is one example of how large-scale capital can support expansion while the existing promoter retains control.

But institutional capital also changes the relationship within a business. Once an investor enters, there are new shareholders, new rights, greater reporting expectations and potentially new limits on important decisions. That is not necessarily a disadvantage. For a professionally structured business, it can provide the discipline and resources needed for the next stage of growth.

For businesses in Kashmir, this could become an increasingly important conversation. Family-owned businesses in hospitality, healthcare, manufacturing, tourism and other sectors may eventually look beyond traditional sources of capital as they expand. But before the investor arrives, the business needs to be ready with clear ownership, documented contracts, proper compliance, defined management roles and a structure that can withstand institutional due diligence.

As private equity lawyer Purvi Kapadia has put it, a good PE lawyer must understand the “pulse of the transaction” while helping clients recognise the immediate and future challenges that may arise from it.