Private equity groups can be your exit strategy; they have cash.
Private Equity firms (PE) raise funds from institutions and wealthy individuals and then invest that money in buying and selling businesses. After raising a specified amount, a fund will close to new investors; each fund is liquidated, selling all its businesses within a preset time frame, usually no more than ten years. The PE is called a general partner and generally charge both a management fee and a performance fee.
Private equity groups’ business valuations are likely to be lower than a market process will provide.
By definition, PE firms have substantial cash and resources to invest. It can be very attractive to get an ‘all cash deal’ and not have to concern yourself with a buyout over time or vendor take back that is dependent on the future performance of the company. In today’s business climate, there is significant monies available for these types of investments and the firms are expert at proposing and closing deals. But did you get the best deal possible? Maybe, but maybe not, as their objective is to get your company for the lowest value possible. The firm will usually provide the Business Valuation and will require exclusivity while they are talking to you.
A better way – involve all of your advisors.
Most business owners will involve their accountants and lawyers in the process at some point. It is critical to receive an independent valuation before the potential sale of your business. That is the first step in our process of representing you and help to sell your business after which we can show your business to multiple and qualified business buyers. We refer to this part of our service as the ‘auction process’ hoping to get multiple initial bids for you to consider.
If you are approached by anyone, including Private Equity firms, unsolicited, we can help you to make sure you are getting the best, and right deal for you. Contact us today.