Selling to private equity 

4th July 2024 / Aly Young / No Comments

Many people perceive a sale to PE, as a ruthless affair. However, selling out to private equity groups doesn’t have to mean a predatory transaction. 

These sales may range from a minority buy-in to a majority buy-out, where the owner retains either a minority or majority stake. Or a complete transfer of ownership, maybe with some transition arrangements. 

 A key advantage to selling to investors such as these is their wealth of experience of running multiple types of businesses. Sometimes the sale is even more specialist to a PE group that has an expertise in a particular sector. 

Their ambitions usually involve growth, so for owners who stay in, this can enhance the value of the stake they retain. 

They won’t normally have an operations team to continue to run the business after the owner exits, so if you are an owner thinking of selling to investors like these, you should upskill existing people in the business to be able to run it, once you have left, particularly if you are going to agree an earn out. 

Some PE investors focus on more “ethical” investments, building sustainable practices which improve operational efficiency and brand enhancement. 

Retained employees will often be given the chance for training and professional development and opportunities across a PE group. 

Its important to most owner managers to know that the business will be in good hands when they exit. Therefore, do your research on the groups that you might be considering. Look at their track record of investments.  

  • What has happened to the companies they have previously acquired?  
  • What are their values?  
  • How have they managed the businesses they took on? 
  • Does their approach align with your own hopes and dreams for the future of the business you have built? 

We at AYL are experts in helping owner managers of small to medium size businesses exit through sale and have the ability to handle buyers from all different backgrounds. 

If you are thinking of going down this path, its really important as with all business sales, to do your homework. Give your business a thorough audit to make sure all is well. PE investors will be extremely thorough in their due diligence so make sure there are no skeletons in the closet.  

We can help you prepare for sale to ensure as smooth a ride as possible. 

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Solicitor with 30 years experience of working in business. Specializing in protecting multiple owners in business together and business sales and acquisitions.

Aly Young
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