The Basics of Selling Your Business to a Private Equity Firm

About the Episode

Join us for this continuing conversation with experts in the M&A field, Jim Evanger and Brent Paris, as they share their diverse experiences in partnering with private equity firms. They give insights into what the private equity buyer is thinking, share successful partnership stories, and the prerequisites for a business owner partnering with a PE firm. Listen now to discover how to get more upside from your business and consider how a PE partner might be able to help you achieve your ultimate goals.

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In this Episode

1:15 What does it mean to partner with a private equity firm?
3:23 Why choose a partnership with PE firms rather than buying these companies outright?
4:36 What was it like to own your own company and use your own capital vs. partnering with a PE firm?
9:20 Is partnering with a PE firm a kind of phased exit, with the first phase being partnering with a PE firm and the second and final phase being the second exit? 
11:48 Where did private equity get the bad reputation of firing everybody and scaling down costs?
16:07 An example of a success story of a company partnering with a PE firm
18:22 What are the prerequisites for a business owner partnering with a PE firm?
21:05 Prerequisite 1: Review the audited financial statements.
24:06 Is there value in the seller doing a quality of earnings (Q of E) analysis before putting their businesses in the market?
27:17 Would you prefer an audit or a Q of E analysis from the seller?
32:25 Prerequisite 2: Family members in the business.
36:07 What is the immediate impact on the value of the company if several owners want to exit the company immediately?
39:23 Prerequisite 3: Earnings or EBITDA margin over 10% to 15% of revenue.
41:07 Prerequisite 4: Customer concentration.
45:22 Cash at closing from an owner’s perspective.

Learn More About This Episode

To suggest guests, topics, or questions for future podcast episodes, contact Morgan & Westfield.

Meet Our Guest

Jim Evanger

Jim Evanger

Operating Partner and Interim CEO

Jim Evanger has had a diverse leadership career, having built executive teams in Fortune 100, middle market, and entrepreneurial start-up businesses. His industry experience spans healthcare, retail, franchising, light manufacturing, and private equity. Most recently, Jim has been a Private Equity Operating Partner and Interim CEO for PE-owned businesses ranging in size from $5 million to $100 million.

Jim came up through the ranks at Merck & Co., beginning as a sales professional and later as a manager, building a team across 33 states and Canada. After almost 10 years in corporate America, Jim launched his first business that franchised itself to 14 states across the US. After selling that franchise business, he built and led high-performing teams in diverse small to mid-sized companies, some of which are private-equity owned. This experience helped propel Jim into various Operating Partner roles with firms such as Dubin Clark & Co. and Latticework Capital, where he sits on Boards and advises CEOs on strategy and execution.

Location Location: United States

Meet Our Guest

Brent Paris

Brent Paris

Managing Partner at Dubin Clark

As Managing Partner at Dubin Clark, Brent Paris focuses on sourcing, financing, executing, and overseeing platform and add-on acquisitions. He joined Dubin Clark in 2001 and has completed more than seventy middle-market transactions. Prior to Dubin Clark, Brent was an Associate for investment banking firm Latek Capital Corp and, during business school, worked as an Analyst with money-management firms Waveland Capital Management and Brinson Partners. Brent served as an Accounting Manager for money-management firm Grosvenor Capital Management and as a Senior Tax Accountant for public accounting firm Altschuler, Melvoin & Glasser LLP, which is now part of RSM US (formerly McGladrey & Pullen LLP). Brent currently serves on the boards of directors of several companies and is the current Chair of Beaches Habitat for Humanity.

Brent received a B.S. in Accounting from Indiana University Kelley School of Business, an M.B.A. in Finance & Entrepreneurship from the University of Chicago Booth Graduate School of Business, an MS in Taxation from DePaul University Kellstadt Graduate School of Business, and is an inactive CPA.

Location Location: Jacksonville Beach, Florida

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