Private equity (PE) firms are the most active buyers in the market, so sellers need to understand how they operate. Matt Coyne offers expert advice on how to make selling your middle-market company to a PE firm the best option. He discusses what PE firms look for in a company, the benefits and concerns when considering selling to a PE firm, tips on how to work with them, how the finances are typically structured, and what an owner can expect once they sell.
“Any business making over $500k a year has a pretty good chance of being sold to a private equity group.”
Matt Coyne
What You’ll Learn
The Basics of PE Firms: Learn about private equity, who the investors are, and the 10-year plan once they’ve bought your company.
What PE Firms Look For: PE firms are often the best buyers for hard-to-sell companies, whether they are making a platform acquisition or an add-on acquisition.
Considerations for Owners: Sellers need to consider how long they are willing to stay on after the sale and how they will be compensated when selling to a PE firm.
Benefits and Challenges: PE firms are very good at growing companies, but they won’t buy 100% of your business.
Topics Covered
What types of acquisitions do private equity groups do? [1:45]
What is the 10-year cycle of a PE investment? [11:22]
What are PE firms looking for in a lower middle-market company? What are the advantages and disadvantages of selling to a PE firm? [17:54]
Why don’t PE firms buy 100% of a company? [27:38]
What is the typical deal structure when a PE firm buys a company? [29:45]
What prerequisites do owners and companies need to meet to sell to a PE firm? [35:12]
How do owners tend to get in their own way when it comes to growing and selling their business? How does this translate into the biggest benefit of selling to a PE firm? [38:58]
What multiples do private equity firms typically pay? [42:00]
How do PE firms structure an employment agreement with the owner? [47:49]
With almost 30 years in the M&A world, Matt Coyne helps business owners throughout the M&A process. He is the founder of the M&A Mastery Program, a mentoring program for business owners who are selling their company, and the president of Brandywine Mergers & Acquisitions, an M&A advisory firm that helps business owners evaluate and execute the sale of their businesses.
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