The PE Alternative
Owners and stakeholders of companies with strong cash flows, defendable market positions, products and services in expanding markets and a management team capable of driving the business forward must consider private equity (PE) groups, or financial buyers, as a viable alternative to exiting their business. Although these groups vary in size and focus, most PE groups bring a level of sophistication to the transaction process rarely matched by other prospective buyers. Return on investment is the name of the game; therefore, cash flows and management team depth and quality drive value and purchase prices.
The advantages of PE buyers:
- Flexibility with transaction structure;
- Cash/access to capital – new acquisitions, diversify risk;
- Management drives growth; shares upside potential;
- Additional returns for owners/stakeholders; i.e. “2nd bite of apple;”
- No business disruption; maintain customer loyalty, employee morale;
- Growth-focused; upside potential reliant on management team solely;
- May be highly leveraged; Debt – no room for error;
- Short-term owner/stakeholder participation;
- Increased reporting requirements; financial/operational;
An experienced M&A Team can help business owners understand their alternatives and choose the right option to maximize the value of their business and achieve their long-term goals.