Growth Equity vs Private Equity: Key Differences Explained in 2026
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Growth Equity vs Private Equity: Key Differences Explained in 2026

Growth Equity vs Private Equity: What Actually Distinguishes Them

Growth Equity vs Private Equity: What Actually Distinguishes Them
Growth Equity vs Private Equity: Key Differences Explained in 2026

By CT Acquisitions Editorial Team, reviewed by senior M&A advisors. Last reviewed: June 2026.

Growth equity vs private equity is the wrong framing if you treat them as separate asset classes. Growth equity is a strategy inside the broader private equity universe, but the practical differences (minority vs control, no leverage vs heavy leverage, growth-stage vs mature) change everything about how a deal gets priced, structured, and closed. If you run a $10M to $50M revenue business and both types of firms are circling you, the choice is not academic: it determines who runs your board, how much you take off the table, and whether you keep operating your company for the next five years.

TL;DR: The Five Differences That Actually Matter

Growth equity buys minority stakes (typically 10% to 40%) in profitable, growing companies using primarily equity checks with little or no debt, targeting a 3x to 5x MOIC over five to seven years. Private equity buyout funds acquire majority control (usually 70% to 100%) of mature, cash-generative companies using 50% to 65% debt-to-equity leverage, targeting a 2.5x to 3x MOIC over three to six years. Both live under the private equity umbrella at PitchBook and Preqin, but they hunt different companies and generate returns through different levers.

Dimension Growth Equity Buyout (Traditional PE)
Stake acquired 10% to 40% (minority) 70% to 100% (control)
Leverage used 0% to 20% of purchase 50% to 65% of purchase
Target company stage Growing, often just profitable Mature, stable cash flows
Typical revenue at investment $10M to $200M $25M to $2B+
Typical EBITDA at investment Not required, or $3M+ $5M to $200M+
Check size (equity) $10M to $150M $50M to $5B+
Primary return driver Revenue and EBITDA growth Leverage, multiple expansion, operational improvement
Target hold period 5 to 7 years 3 to 6 years
Target gross MOIC 3x to 5x 2.5x to 3x
Target net IRR 18% to 25% 15% to 22%
Founder often stays as CEO Yes (usually) Sometimes, often replaced within 24 months
Board seats granted 1 to 2 Majority of board
Named examples (US) Insight Partners, General Atlantic, TA Associates, Summit Partners KKR, Blackstone, Carlyle, Apollo, Bain Capital

Sources: PitchBook Q4 2025 PE Benchmark Report, Cambridge Associates Private Investments Benchmark (Dec 2025 vintage), Insight Partners public statements, KKR Form 10-K FY2025.

What Is Growth Equity?

Growth equity is a private capital strategy that provides minority-stake, primarily unleveraged equity to profitable or near-profitable companies with proven business models, in exchange for board representation and negative-control rights. The check size typically runs $10M to $150M, the investor rarely takes more than 40% of the company, and the money is used for scaling (sales hiring, geographic expansion, product development, tuck-in M&A) rather than for buying out existing owners.

The classic growth equity profile

The National Venture Capital Association and PitchBook classify a company as a growth equity target when it hits roughly $10M to $100M in revenue, has grown 20% to 100% year over year for at least two consecutive years, and has demonstrated a path to profitability even if it is not fully profitable at investment. Software-as-a-service is the archetypal growth equity vertical because SaaS metrics (ARR, net revenue retention, LTV to CAC) are legible to investors.

The classic examples: Insight Partners investing $50M in Shopify in 2013 at roughly $50M revenue; General Atlantic investing in Airbnb in 2011 at Series C; TA Associates backing MRI Software in 2015. In each case, the founder kept operating control, the investor took a minority stake and a board seat, and no debt was used to fund the purchase.

Where the growth equity check goes

Unlike a buyout, most of the growth equity check enters the company as primary capital (goes onto the balance sheet, funds growth) rather than secondary capital (buys out founders and early investors). A typical structure runs 60% to 80% primary, 20% to 40% secondary, with the secondary letting founders take some money off the table without losing control. This partial liquidity feature is one of the reasons founders often prefer growth equity when they want to derisk personal net worth but keep building.

What Is Private Equity (Buyout)?

Private equity in the narrow, common usage refers to leveraged buyouts: an acquisition of a controlling stake in a mature company, financed with a mix of equity (typically 35% to 50% of purchase price) and debt (typically 50% to 65%), where the debt is placed on the target company’s balance sheet and repaid from the target’s operating cash flow. The buyout fund holds the company for three to six years, then exits via strategic sale, secondary buyout, or IPO.

The mechanics of a leveraged buyout

In a stylized $200M buyout, the private equity firm might contribute $80M in equity from its fund and arrange $120M in debt from a mix of senior lenders (banks, direct lenders like Ares or Blackstone Credit) and mezzanine providers. The $120M in debt is legally owed by the target company, not the fund. Over the hold period, the company uses free cash flow to pay down the debt, and the fund’s equity value grows through three mechanisms: debt paydown, EBITDA growth, and multiple expansion at exit. Our step-by-step walkthrough of this math lives in our leveraged buyout model from scratch guide.

Why control matters in a buyout

The buyout fund pays a control premium (roughly 20% to 35% above what a minority investor would pay for the same stake) because control lets it make unilateral decisions: replace the CEO if performance lags, dictate capital allocation, sell divisions, take on more debt, and choose the exit path. Minority investors do not have these unilateral rights, which is why growth equity firms accept lower prices per share for the same company.

Are Growth Equity and Private Equity the Same Asset Class?

Technically yes, functionally no. Under the standard PitchBook and Preqin classification, private equity is the umbrella category and growth equity sits inside it alongside buyout, distressed, mezzanine, and secondaries. But in day-to-day industry usage, “private equity” almost always means buyout, and growth equity is spoken of as a distinct discipline with different diligence, different value creation, and different investor personalities.

The classification framework

PitchBook classification Included strategies
Private equity (broad) Buyout, growth equity, distressed, mezzanine, secondaries, PIPE
Buyout (narrow PE) Small-cap, mid-cap, large-cap, mega-cap buyouts using leverage
Growth equity Late-stage growth, growth buyout, expansion capital
Venture capital Seed, Series A, Series B, Series C+ (until profitability)

Source: PitchBook methodology handbook, 2025 update.

What the SEC calls it

On Form ADV, both growth equity and buyout firms file as “private equity fund” advisers. The SEC does not currently maintain a formal regulatory distinction between the two, though the 2025 amendments to Rule 206(4)-8 clarified disclosure obligations for growth-stage investments where the fund holds less than 50%. For fund reporting purposes on Form PF, growth equity funds under $2B AUM report as Section 3 filers if they cross the threshold.

How Control and Stake Size Differ

Growth equity funds typically take 10% to 40% of the company (average around 25% per PitchBook data through Q4 2025), while buyout funds take 51% to 100% (average around 88% for US mid-market deals in 2025). The threshold matters because control changes the whole legal and governance posture of the investment: consolidated financials, tax elections, forced sale rights, drag-along rights, and board composition all flip when you cross 50%.

What minority investors negotiate for

Because a growth equity investor cannot force decisions unilaterally, they compensate through contractual protections. A well-structured growth equity term sheet includes: board seats (usually 1 to 2 of 5 to 7 total), protective provisions (veto rights over major decisions like debt issuance, new equity, sale of the company, changes to the option pool), pro rata rights on future rounds, tag-along rights, drag-along rights (in later rounds), redemption rights (rare but sometimes present), and information rights (monthly financials, board packet).

What control lets a buyout fund do

A majority-owned portfolio company runs by fund-appointed CEO, fund-designed board, and fund-approved budget. The fund can replace management within days if performance disappoints, force sale of non-core divisions, add or remove debt from the balance sheet, and set the exit timeline unilaterally. This operating power is why buyout returns are described as manufactured returns: the fund pulls specific levers rather than waiting for organic growth.

How Leverage Differs

Growth equity deals use little or no debt. Buyout deals use debt as their primary return lever, typically 50% to 65% of the purchase price. This single difference explains most of the risk and return divergence between the two strategies.

Why growth equity avoids leverage

Growth equity targets are usually reinvesting cash into growth rather than generating stable free cash flow. Lenders will not extend meaningful debt against a company that is spending 40% of revenue on sales and marketing to grow 50% a year, because the debt service coverage ratio (EBITDA to interest expense) does not clear the standard 2.0x threshold direct lenders require. Even if lenders would extend credit, the founder-CEO usually refuses to burden a growth-stage company with debt payments that compete with growth investments.

Why buyouts require leverage

A mature company generating $20M of EBITDA can service $80M to $120M of debt (roughly 4x to 6x EBITDA), letting the fund buy the company at 8x to 10x EBITDA while only writing an equity check of $80M to $120M. Without leverage, the same deal would need $200M of equity, cutting the fund’s return by half. The leverage does the heavy lifting on IRR: a 3x MOIC over five years works out to a 25% IRR only because roughly two-thirds of the price was other people’s money.

Recent leverage trends

According to LCD’s Q1 2026 Leveraged Loan Review, average total debt-to-EBITDA on US large-cap sponsored buyouts ran 6.4x in 2025, down from 7.1x in 2021 as base rates and unitranche spreads pushed all-in coupons above 10%. Mid-market buyouts closed 2025 at an average of 5.6x total leverage. Growth equity deals in the same period used a median of 0x leverage, with a small tail of growth buyouts using 3x to 4x.

Target Company Stage and Revenue

Growth equity funds target companies that have crossed product-market fit but are not yet mature: usually $10M to $200M revenue, growing 20% to 100% year over year, sometimes just barely profitable. Buyout funds target mature businesses with $25M to $2B+ revenue, growing 5% to 15%, generating stable free cash flow that can service debt.

The stage distinction in practice

Company stage Typical revenue Typical growth rate Primary capital source
Seed $0 to $1M Pre-revenue or 300%+ Angels, seed VCs
Early venture $1M to $10M ARR 150% to 300% Series A-B venture
Late venture $10M to $50M ARR 75% to 150% Series C-D venture, some growth
Growth equity $25M to $200M 20% to 100% Growth equity, late venture
Buyout (LMM) $10M to $250M 5% to 25% Lower mid-market PE, family offices
Buyout (MM) $250M to $1B 5% to 15% Mid-market PE
Buyout (large) $1B+ 3% to 12% Large-cap PE (KKR, Blackstone)

Sources: NVCA 2025 Yearbook, PitchBook US PE Breakdown Q4 2025.

Where the two strategies overlap

The blurriest zone is the “growth buyout” segment: minority-into-majority deals at $50M to $200M revenue, growing 25% to 40% a year. Firms like TA Associates, Summit Partners, and Warburg Pincus have raised dedicated growth pools that can write either minority or majority checks. Vista Equity Partners is the most-cited crossover firm: its flagship funds do control buyouts, its Perennial fund does hybrid growth-plus-buyout, and its Endeavor fund does earlier-stage growth equity checks under $50M.

Deal Size Ranges

Growth equity check sizes have crept up over the last decade. In 2015, the average growth equity check was $25M. By 2025, per PitchBook, the average US growth equity check hit $58M and the median was $32M. Buyout check sizes vary by fund tier: lower mid-market buyouts run $10M to $100M in equity, mid-market $100M to $500M, and mega-cap buyouts routinely write $1B+ equity checks (the KKR-CVC-EQT tier).

2025 deal-size snapshot

Strategy Average equity check 2025 Total deal size 2025 EBITDA multiple paid 2025
Lower mid-market buyout $30M $75M 7.4x
Mid-market buyout $140M $400M 10.2x
Large-cap buyout $650M $1.8B 12.5x
Growth equity (minority) $32M $32M Revenue multiple, 4x to 12x ARR
Late-stage growth $85M $85M Revenue multiple, 6x to 15x ARR

Sources: PitchBook US PE Breakdown Q4 2025; GF Data 2025 Report (LMM buyouts).

Return Profile and Fund Benchmarks

Buyout funds and growth equity funds have converged on returns over the last decade, though the return drivers remain different. Per Cambridge Associates’ December 2025 benchmark, US buyout funds vintage 2013-2020 delivered a 15.2% net IRR and 1.9x TVPI on a pooled basis. US growth equity funds vintage 2013-2020 delivered a 14.8% net IRR and 1.8x TVPI on a pooled basis.

How each strategy manufactures returns

Buyout returns come from three levers: debt paydown (25% to 40% of value creation), EBITDA growth (30% to 45%), and multiple expansion (15% to 35%), per Bain & Company’s 2025 Global PE Report. Growth equity returns come almost entirely from revenue and EBITDA growth (75% to 90%), with a small multiple-expansion contribution when the company matures during the hold period and re-rates from a growth-stage multiple to a mature multiple.

Top-quartile vs median

The gap between top-quartile and median funds is larger in growth equity than in buyout. Per Cambridge Associates 2025 data, top-quartile buyout funds returned 21.4% net IRR vs median 13.6% (a 780 bps spread). Top-quartile growth equity funds returned 23.9% net IRR vs median 11.8% (a 1,210 bps spread). Manager selection matters more in growth equity because the underlying company outcomes are more dispersed.

Recent vintage stress

Growth equity funds from vintages 2019-2021 have struggled as the growth multiple compression hit their SaaS and tech-services portfolios. Per PitchBook Q4 2025, 2021-vintage US growth equity funds are running at 1.1x TVPI on average, versus 1.4x for 2021-vintage buyout funds, because buyout funds relied less on multiple expansion to underwrite their entry prices.

Risk Profile

Growth equity investments carry higher business risk (the company may fail to hit growth targets) but lower financial risk (no debt to service). Buyout investments carry lower business risk (the target is mature and stable) but higher financial risk (the leverage magnifies any operational downturn).

What goes wrong in growth equity

The dominant failure mode: the company misses its growth plan. A growth equity firm underwrites 25% ARR growth over five years; the company delivers 10%. The multiple compresses at exit (because slower growth commands a lower revenue multiple), the return drops from 3x MOIC to 1.2x MOIC, and the fund loses roughly 60% of expected upside without losing capital. Because growth equity uses little or no debt, the company usually survives even a bad growth outcome, but the investor return suffers.

What goes wrong in buyouts

The dominant failure mode: leverage-driven default. A buyout closed at 7x EBITDA with 5.5x total leverage assumes stable or growing EBITDA. If EBITDA drops 25% (recession, customer loss, cost inflation), interest coverage falls below 1.0x, the company breaches covenants, lenders take control, and the fund’s equity is wiped out. The 2022-2024 default cycle in leveraged loans (per S&P LCD data, the LTM default rate hit 5.8% in Q1 2024, the highest since 2010) showed how leverage bites when rates and margins move against a sponsor.

Hold Period

Growth equity funds hold portfolio companies longer (typical five to seven years, sometimes ten in patient-capital strategies) because the value creation depends on the company completing a growth cycle. Buyout funds hold shorter (typical three to six years, though the 2022-2025 exit drought has pushed medians toward six-plus) because their playbook (add leverage, improve operations, exit) can be executed in a shorter window.

2025 hold-period data

Per PitchBook Q4 2025, the median hold period for US buyout-backed exits in 2025 hit 7.1 years, the longest since PitchBook started tracking. Median hold for growth-equity-backed exits ran 6.8 years. Both extended because the 2022-2023 SPAC bust, the 2023 IPO drought, and the 2024-2025 higher-for-longer rate environment forced funds to hold portfolio companies longer waiting for exit windows.

Named Firms in Each Camp

The clearest way to see the difference is to list the firms most associated with each strategy. Not perfect (many firms do both), but useful.

Pure or near-pure growth equity firms

Pure or near-pure buyout firms

Crossover firms doing both

Sources: firm websites, SEC Form ADV filings 2025, Preqin firm profiles.

How a Founder Should Choose Between Growth Equity and a Buyout

If you own a $10M to $50M revenue business and both types of firms want to talk, the choice comes down to three questions: how much control are you willing to give up, how much cash do you need off the table now, and do you want to keep running the company for the next five years.

Take growth equity if

Take a buyout if

Take neither (yet) if

A structured conversation with an experienced M&A advisor before you take any investor meeting will save you months of misaligned pitches. Our guide on why to hire an M&A advisor walks through the sequencing.

Growth Equity vs Venture Capital (Sidebar)

Growth equity is often confused with late-stage venture capital because both take minority stakes in growing companies. The practical differences: growth equity companies are profitable or near-profitable, venture-backed companies are usually still burning cash; growth equity checks come with board seats and protective provisions but rarely with control-flip triggers, whereas late-stage venture rounds increasingly include ratchets, IPO-related preferences, and complex liquidation stacks; growth equity firms underwrite to 3x to 5x MOIC, venture firms underwrite the whole portfolio to 10x+ on winners because the loss ratio is higher.

Where they overlap

The blurriest cases: Series D and Series E rounds in profitable SaaS companies. Insight Partners routinely leads these rounds and would call them growth equity. Andreessen Horowitz would call the same round late-stage venture. The label depends on the firm’s classification, not on any objective test.

Valuation Approach for Each Strategy

Growth equity firms and buyout firms use different valuation frameworks because they are underwriting different value drivers. Understanding these differences helps a founder read a term sheet correctly.

How growth equity firms value companies

Growth equity firms typically use a revenue multiple for SaaS and subscription businesses (4x to 15x ARR depending on growth rate, gross margin, and net revenue retention) and an EBITDA multiple for services and traditional businesses (10x to 20x forward EBITDA). They discount using a lower cost of capital than venture (roughly 12% to 18% versus 25% to 35% for venture) because the risk profile is lower.

How buyout firms value companies

Buyout firms build detailed LBO models using EBITDA multiples anchored to comparable transactions and comparable public companies, plus a leveraged buyout return analysis targeting a 20% to 25% IRR. The typical entry multiple in 2025 US mid-market buyouts ran 10.2x forward EBITDA per GF Data, though tech-services and healthcare buyouts routinely closed at 12x to 15x. We cover the underlying valuation mechanics in our how to value a business guide and our LBO explainer.

Fee Structures and Economics

Both strategies charge the standard “two and twenty” (2% management fee on committed capital, 20% carried interest above an 8% preferred return), but the details differ.

Growth equity fee nuances

Larger growth equity funds ($5B+) have compressed management fees to 1.5% to 1.75%, and top-quartile firms sometimes negotiate hurdle rates above 8% (some Insight Partners funds run without a hurdle in exchange for a lower carry percentage). Because growth equity funds deploy checks more slowly (three to four year investment period), the management fee drag on net returns is meaningful: a 2% fee over ten years on committed capital costs LPs roughly 15% of gross value.

Buyout fee nuances

Mega-cap buyout funds ($15B+) charge 1.25% to 1.75% management fees but often layer transaction fees, monitoring fees, and portfolio-company service fees on top. Post-2013, the SEC has scrutinized fee-and-expense disclosures under Section 206(4)-8, and most large buyout funds now offset 100% of transaction and monitoring fees against management fees. Smaller buyout funds ($500M to $2B) charge the standard 2% and rarely offset.

2025-2026 Market Context

Both strategies faced difficult 2022-2024 conditions and are entering a slower recovery in 2025-2026.

Fundraising

Per PitchBook Q4 2025, US private equity buyout fundraising hit $221B in 2025, down from $364B in 2021 but up from $195B in 2024. Growth equity fundraising hit $47B in 2025, down from a $78B peak in 2021. The pullback reflects LP denominators (public markets rallied, private allocations exceeded target weights) and DPI pressure (LPs demanding distributions before committing to new funds).

Deal activity

US buyout deal value in 2025 was $543B across 4,200 deals per PitchBook, roughly flat with 2024 in dollar terms but up 12% in count. Growth equity deal value was $89B across 1,150 deals, up 18% from 2024. Both strategies are seeing a shift toward smaller check sizes and higher deal counts as valuation expectations have compressed.

Exit activity

2025 US PE-backed exit value was $321B, still below the 2021 peak of $832B but up 42% from 2024. Sponsor-to-sponsor (secondary buyout) exits accounted for 44% of exit count in 2025, the highest share on record, as strategics remained cautious about acquisition prices and IPO windows stayed narrow.

Diligence Differences

The diligence process for a growth equity round runs faster and lighter than for a control buyout, because the investor is buying less risk. Growth equity diligence typically completes in 45 to 75 days from term sheet to close, while buyout diligence runs 90 to 150 days depending on deal complexity.

What growth equity firms diligence hardest

Growth equity diligence centers on the growth story: cohort analysis, net revenue retention, sales pipeline conversion, CAC payback period, customer concentration, and management team quality. For SaaS targets, firms like Insight Partners and General Atlantic dig into logo retention (NRR above 110%), gross retention (above 90%), sales rep productivity ($1M+ ARR per fully ramped AE), and expansion economics. Legal diligence is lighter than in a buyout because the investor is not assuming operating liability for the whole company.

What buyout firms diligence hardest

Buyout diligence adds heavy quality-of-earnings analysis, working capital normalization, debt-capacity modeling, and management assessment (because the fund may replace leadership). Big Four accounting firms, or specialty QoE providers like Riveron and CohnReznick, produce 100-plus page reports that scrub adjusted EBITDA line by line. Buyout funds also commission environmental, insurance, IT, HR, and cyber diligence, and the total diligence spend on a mid-market buyout routinely runs $1M to $3M against the buyer.

Governance After the Investment

Post-close governance looks completely different depending on whether you took growth equity or a buyout.

Life after a growth equity round

The founder-CEO remains in charge day to day. The board expands to include one or two investor directors plus an independent director the investor typically nominates. Monthly financials and quarterly board meetings become mandatory. The investor exercises negative-control rights only on specific enumerated actions (new debt, new equity, sale of the company, changes to charter, senior management changes), but does not run operations. Most decisions still sit with the founder and management team.

Life after a buyout

The buyout fund controls the board, sets the strategic plan (usually within 100 days via a formal value-creation plan), and often installs a new CFO within six months. The founder either stays as CEO with a rollover equity stake (typically 5% to 20%), transitions to chairman for 12 to 18 months, or exits at close. Compensation restructures materially: management incentive plans (MIPs) typically grant 8% to 12% of equity to the top team, vesting over four to five years tied to exit outcomes. The fund pushes accountability through weekly operational KPI reviews and monthly board meetings for the first year.

Exit Paths

Both strategies pursue similar exit paths (strategic sale, sponsor-to-sponsor, IPO), but the mix differs.

How growth equity exits

Growth equity’s most common exit route is participating in a subsequent round or in an IPO. Because the firm holds a minority stake, it does not control the exit timing and often exits piecemeal: partial secondary sale to a later-stage growth investor, tag-along on a founder-initiated buyout, or a distribution of stock to LPs after IPO lockup expires. Per PitchBook, 32% of US growth-equity exits in 2025 were secondary sales to later-stage growth or buyout funds, 24% were strategic acquisitions, 18% were IPOs, and the remainder were structured recaps or continuation vehicles.

How buyouts exit

Buyout funds control the exit process. Per PitchBook Q4 2025, US buyout exits in 2025 broke down as 44% sponsor-to-sponsor sales (secondary buyouts), 37% strategic sales to corporate acquirers, 12% IPOs, and 7% continuation vehicles or partial recaps. The rise in continuation vehicles (up from 2% of exits in 2019 to 7% in 2025 per Preqin) reflects funds holding trophy assets longer through GP-led secondary transactions.

Tax Treatment

Tax treatment differs on both the investor side and the founder side.

Founder tax outcomes

A minority growth equity sale of secondary shares by a founder typically qualifies for long-term capital gains treatment (federal rate 20% plus 3.8% NIIT) if the founder has held the shares longer than a year. Founders in Qualified Small Business Stock eligible C-corps (per Section 1202) may exclude up to $10M or 10x basis from federal tax if they meet the five-year hold. See our M&A advisor guide for how a sell-side process interacts with tax planning.

A full buyout typically triggers full capital gains recognition on the sale portion (or rollover equity treatment on the retained portion under Section 351 or Section 368 depending on structure). Founders taking rollover equity of 20% to 40% can defer tax on the rolled portion, but pay tax immediately on the cash portion at capital gains rates. State tax residency planning becomes material for eight-figure and nine-figure exits.

Investor tax outcomes

Both growth equity and buyout funds pass through gains to LPs as long-term capital gains (assuming greater than one-year holds), and carried interest to GPs is taxed at long-term capital gains rates under current federal law. The three-year hold requirement under Section 1061 for carried interest applies to both strategies. Buyout funds also generate meaningful ordinary-income interest deductions at the portfolio-company level that flow up as tax attributes.

How CT Acquisitions Approaches These Conversations

If you are a lower-middle-market business owner (roughly $5M to $50M in enterprise value) and both growth equity firms and buyout funds are reaching out, an M&A advisor’s job is to structure a competitive process that surfaces the best fit. We work on retained sell-side engagements where we run parallel outreach to both classes of buyer, letting price, terms, and cultural fit determine the outcome instead of the founder having to guess which type of capital is right.

Our practical differentiation for LMM sellers: transparent retainer-based fees (no hidden marketing charges), direct-advisor delivery (not junior-associate handoff), industry-vertical specialization with existing PE-buyer contact networks, and curated buyer outreach rather than passive marketplace listings. We focus exclusively on $5M to $50M EV businesses, which means we do not turn away deals the bulge bracket firms consider too small. Our sell-side advisory page covers our engagement model.

Schedule a 30-minute exit-readiness call at ctacquisitions.com/contact-us if you want a candid read on whether growth equity, a full buyout, or a strategic sale is likely to produce the best outcome for your business.

Frequently Asked Questions

What is the difference between private equity and growth equity?

Private equity (in the common usage, meaning buyout) takes majority control of mature companies using heavy leverage (50% to 65% debt) and targets 2.5x to 3x MOIC over three to six years. Growth equity takes minority stakes (10% to 40%) in growth-stage companies using little or no debt, targeting 3x to 5x MOIC over five to seven years. Both are technically private equity strategies, but the deal mechanics are distinct.

Is growth equity considered private equity?

Yes, under the PitchBook, Preqin, and Cambridge Associates classification frameworks, growth equity is a strategy within the broader private equity asset class. On SEC Form ADV, growth equity funds file as private equity fund advisers. In day-to-day industry usage, however, “private equity” typically refers to buyout funds specifically, and growth equity is treated as a distinct discipline.

Do growth equity firms use leverage?

Growth equity firms use little or no leverage in their investments. Most growth equity checks are 100% equity, with 0% to 20% debt at the target-company level in rare growth-buyout transactions. This contrasts with buyout funds, which routinely place 50% to 65% debt on portfolio company balance sheets. The absence of leverage is one of the defining features of growth equity as a strategy.

How much do growth equity partners make?

Growth equity partners at top firms (Insight Partners, General Atlantic, TA Associates, Summit Partners) typically earn $500K to $1.5M in base and bonus, with meaningful carried interest that can add $2M to $15M per year on realized funds depending on fund performance and seniority. Senior managing partners at mega firms can earn $10M+ per year in cash and carry combined during strong exit years, per compensation data from Heidrick & Struggles’ 2025 PE Compensation Survey.

What is a typical growth equity deal size?

The average US growth equity check in 2025 was $58M, with a median of $32M per PitchBook data. Smaller growth equity checks start around $10M for late-stage venture crossover deals. Larger checks routinely reach $100M to $300M for Series D and Series E rounds in profitable software companies. The check size scales with company revenue: a $20M revenue company might take a $25M check, while a $150M revenue company might take a $150M check.

What is the difference between growth equity and venture capital?

Growth equity invests in profitable or near-profitable companies with proven business models, using minority stakes and targeting 3x to 5x MOIC. Venture capital invests in earlier-stage companies, often pre-profitability or pre-revenue, using minority stakes and targeting 10x+ MOIC on winners because the loss ratio is high (roughly one-third of venture-backed companies fail entirely). Growth equity firms discount investments at 12% to 18% cost of capital, venture firms at 25% to 35%.

Which returns better, growth equity or buyout?

Historical returns are comparable. Per Cambridge Associates data through December 2025, US buyout funds vintage 2013-2020 returned 15.2% net pooled IRR, and US growth equity funds vintage 2013-2020 returned 14.8% net pooled IRR. Top-quartile growth equity funds outperformed top-quartile buyout funds by roughly 250 bps of net IRR, but median growth equity underperformed median buyout by roughly 180 bps. Manager selection matters more in growth equity because outcome dispersion is higher.

What firms do both growth equity and buyouts?

Vista Equity Partners is the most-cited crossover firm: flagship buyout funds, Endeavor growth equity fund, Perennial hybrid growth-buyout fund. TA Associates, Warburg Pincus, Silver Lake, Thoma Bravo, and Accel-KKR also do both. These firms can offer founders flexibility in structuring a transaction: minority now with an option for majority later, or a buyout with founder rollover equity of 20% to 40% (structurally similar to a growth equity outcome).

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