Benefits of Selling to Private Equity Groups
What is a Private Equity Group?
Private Equity (PE) Groups are investment pools that raise money to acquire private companies. Typically, a PE Group is run by an investment manager, or managers, whose job it is to:
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Raise capital from investors
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Search for investment opportunities
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Acquire a target company
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Make improvement to the company to create value
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Exit the investment to realize a return on investment
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PE Groups typically will conduct a search for a target, and often engage firms such as our to locate, analyze, and present best-fit companies with high potential for increased value. If you are considering selling your business, we may already have a private equity firm that we work with and can create a match that benefits both sides.
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Not all PE Groups are created equal, but with our long and diverse history working with many different groups, we can find one that is best suited to purchase your company as well as improve operations.
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Seven Benefits of Selling to PE Groups
1.
Reduced Transaction Fees
When dealing with a known PE Group, many of the expenses and overhead associated with marketing and selling your business can be reduced or eliminated.
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No need to create detailed marketing materials for multiple suitors
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Elimination of two-sided brokerage fees and commission expenses
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Reduced need to facilitate meetings, host events, or build data rooms
2.
Confidentiality
While​ we seek to maintain confidentiality even through a public auction, there is always the chance that some information will leak and your intentions known to your market, competitors, as well as your employees. With sales to PE Groups:
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Confidentiality is enhanced through private and direct negotiations
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Sale can often be completed unknown to your competitors
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Your team will be less concerned and have greater assurance of continuity
3.
Alignment with Goals
PE Groups acquire companies for various reasons, and depending on your goals and intended involvement post-sale, a PE Group can be aligned with your goals.
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Complete buyout
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Strategic partnership
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Cash infusion
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Strategic Partnerships
Many PE Groups focus on certain sectors and industries, and seek to align their portfolios to provide greater economies of scale through strategic partnerships. If you intend to remain involved after the sale, the right PE Group may provide:
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Infrastructure support through complementary holdings
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Greater buying power and reduced operational expenses
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Centralized management for more efficient operations
5.
Streamlined Process
Private Equity Groups​ exist for the sole purpose of acquiring and improving businesses. They have typically have teams that are experienced and well prepared to quickly and efficiently complete the process and foresee any speed bumps.
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Forensic accounting to determine profits, losses, assets, inventory, etc.
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Market due diligence to project unrealized value and potential opportunities
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Sign a non-binding letter of intent and with initial deal terms
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Business Continuity
When selling to a PEG, ​you can expect that they will not only continue to operate the business, but will make improvements to it. This is especially important if you're concerned about you company's legacy or the continued employment for your team.
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Continue operations with current customers
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Potential to keep current team employed
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Ability to keep your "sign on the door"
7.
Cash Offers & Infusion
PEGs have deep pockets and the financial resources to purchase companies in lump sum payments, as well as the additional cash to invest in your company to improve it.
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Lump sum cash payouts
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Cash infusion to improve operations
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Pay off existing debts
If you have additional questions about how Pill Hill Partners can help you sell your business, contact us now.