|
Capital is a commodity. While it can be a scarce commodity that has real value, all Private Equity (PE) firms have it. By itself it is only one component that can drive business growth and improvement. When considering a sale of all or part of your business to a PE firm, the first question you need to ask yourself is, “what else besides capital do they bring to the table?” A modern, well-run PE firm can contribute a great deal to your company to make it bigger, better and a lot more profitable.
|
|
You should also ask yourself, how would I run this business differently, if I had access to more capital? Who would I acquire? What projects would I invest in? What would I do to help this business reach its full potential? Once you have answered these questions you are ready to talk to a PE firm. Most are looking for aggressive growth targets and demand a high return on their investments, and these will be the first questions they will ask you.
Why sell to a PE firm Most founders/entrepreneurs of private companies have put all of their energy into their business and have a desire to see their business legacy survive beyond their ownership. Selling to a competitor or another industry player can often result in the loss of brands, plant shutdowns, loss of jobs etc., as the industry buyer amalgamates or integrates the business. While this is a normal part of today’s business, it can still place a huge strain on the employees through the transition period. Selling to PE firm is normally much less disruptive, as they focus on further building of the company. An operationally focused PE firm will bring new business opportunities to staff and key management. It will bring continuity to your brands and your company. Next... PE business expertise |
|