Want to sell your company? This is a potentially lucrative exit plan that every business should consider.

Want to sell your company? This is a potentially lucrative exit plan that every business should consider.
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You’ve founded a company that is making a good profit, and it has grown to be a leader in the market. So you decide to sell and expect a decent return. If you want to sell it, it’s possible to wait until it grows and fetches more money. But this requires capital and management with vision and resources. You could sell to a private-equity firm and remain involved in the growth stage. If you want to know more about if You’re prepared to sacrifice everything in order to reach that goal.

In business it is possible to lose everything, but selling equity raises the stakes. Investors typically expect a seven-fold return on EBITDA at acquisition. Everyone is pleased if the wager pays off. They can lose their entire fortune if the bet doesn’t pay off. You may not have any say on how new owners will play the game.

They are becoming more selective and specific about their acquisitions. However, there is always an opportunity if you have a successful company, with room for growth and the ability to realize your potential. Private equity firms are looking for businesses in proven industries that have a recurring revenue stream. The equity firm Blackstone recognized this when it acquired a majority stake in Spanx, from the founder Sara Blakely, in 2021.

Spanx, which had revolutionized the shapewear market in early 2000s found that its popularity stagnated during the pandemic. It also faced an increasing number of competitors. Blakely wanted to expand her product line and channels, but she needed help from partners. Blakely’s deal with Blackstone valued her company at $1.2billion and returned to billions of dollars in personal wealth. Blakely is still a “significant” Shareholder in a company

The Exit Strategy: It is Time to Develop One for Yourself!

The perfect match for equity

Blackstone would not have looked at Spanx if its foundation was weak. Private equity firms are usually looking for companies with a high level of profitability. They also look for a leadership team that is well organized. A private equity group, after all is just a bunch of wealthy investors. The private equity group does not have employees who can help run the business. They need industry professionals to keep the business running even after the owner leaves or retires. The original team must walk through the doors they open.

You also need to ensure everyone is on the same page about why and how investors are being brought in, what results they hope to achieve, and the way they will achieve those goals. Uncertainty can have disastrous results.

The owner of a regional consulting firm with which I had worked had seen his company grow significantly. He wanted to take it national, but felt that he’d gone as far as possible. A well-known, private equity company bought the majority of his business. They planned to have one partner retire, and the other stay and run the company. They were not clear about the success metrics for the next stage of exit and, worse still, their strategy did not align with that of the equity firm. In a matter of a few short years, the company was out-of-business. The deal was not successful and both partners were owed money from the transaction.

This is the lesson: you need to be very clear. Clarity is possible if you follow these simple steps:

What equity investments can do and what they cannot do

It’s a common misconception among business owners that this is the best option in every situation. They believe that they will grow and prosper the fastest. You may find that it doesn’t work for you.

Clarify your selling strategy to an equity firm

You can either sell your shares to investors at 100% or you can stay and get the profits. “a second bite of the apple” You can expect to receive higher profits after your equity group has grown.

Other entrepreneurs that have been involved with the private equity firm can be interviewed

Private equity firms will have an extensive list of the companies that they own and/or invested in. As you’re entering into a business partnership, you should vet these individuals as you would any partner.

  • Ask the company founders how the investors implemented their strategies. What were the results? How was the process?
  • You can ask about the cultural change in your company. What was the feeling of the founder when he moved from the position at the top, to more employee-like roles? Overall, was it a positive culture? Did the staff enjoy their stay?
  • You can also consult an external advisor.

The financial industry is a niche and private equity deals are rare. This means that news about the Spanx transaction gets a great deal of coverage. Other business owners may make decisions on the basis of this informal, and often inaccurate, word-of mouth coverage. A professional advisor will provide you with the information you need to make an informed decision. Private equity could provide a profitable exit strategy for your company, so you should consider it.

Related: As the private equity industry grows and adapts to changes on the horizon, it is vital to entrepreneurs.

Start with your exit in mind

Have a succession plan that outlines the future and how to get there. Do not just think about the value you desire, but how the transition will proceed. This includes everything from the small details such as how employees should be treated to the big picture goals of leaving a legacy. Give your exit plan some serious thought.

All your potential growth options Before you begin, please read the following: You’ll find that they are more inclined to come and see you if you attract outsiders.

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