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Developing a Successful Relationship with a Private Equity Firm

By Capital Markets

business relationship

If you’re considering a Private Equity (PE) firm to work with, finding one that offers a win-win relationship for both parties will be a big part of the process. As such there are a number of questions you should be prepared to ask the firm when negotiating on your company’s behalf. These include:

What is the firm’s track record with similarly sized companies?

What does the potential partner offer beyond capital?

What are the firm’s communication style and expectations after the deal closes?

Can you see yourself having a successful relationship?

Whilst the first of these questions is based on the Private Equity firm’s track record, the last three questions are based on the intangible aspects of the relationship. This is because, in reality, financial engineering by the PE firm will make up about 10% of the post-integration success, and 90% will be driven by culture, communication, and the ability of the management team of the acquired company to work with the PE firm and the group they assign to it.

The last three questions are the ones you should focus on when spending time negotiating with a PE buyer. Since the majority of PE transactions are structured as partial sales (which usually means that the existing owner and management team are retained and participate as partial owners post-sale) it is vital that you can work well with the firm investing in your business.

As you go through due diligence, the firm will be asking many questions about your business. You should be asking similar questions of them and their principles. If you request to speak to the owners of other companies that they have acquired and find out what their post-acquisition has been this will give you a good insight into the workings of the firm. Ask what plans the equity firm has to grow your business – this is not only financially important but important to your business’s legacy. Furthermore, you should discover whether the firm plans on providing help with key areas of the business such as marketing, sales and web development and whether they have any industry experts in their team that they plan on inserting into the business.

Most importantly is a question that you should ask yourself: do you see yourself having a successful relationship with the firm once the deal has been closed, and can you see yourself becoming part of a team that makes collaborative strategic decisions together? This often becomes crucial to Generational Capital Market’s clients as they seek investors. We are often told post-acquisition that as they got to know buyers, the ongoing legacy of the business became increasingly important.

Getting to know the PE firm that funds your transaction helps owners to gain confidence that the relationship will work moving forward. When you work with Generational Capital Markets, our experienced dealmakers will ensure that you are fully comfortable with your buyer before closing the transaction, whether that means a PE buyer, strategic firm or an off-shore entity.

Find out about the successes of Capital Markets (part of the Generational Group) by viewing our private business successfully completed transactions.

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Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”
Karen S. Williams, CFO, BW Manufacturing
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
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Jay Dinnison, Owner of Sharpe Mixers
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Jay Dinnison, Owner of Sharpe Mixers
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Robert Evans, President and CEO of Mealtracker Dietary Software
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Robert Evans, President and CEO of Mealtracker Dietary Software
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Larry Moore, Owner, A Company Portable Restrooms
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.
Karen S. Williams, CFO, BW Manufacturing
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Bil MacLeslie, CEO, ipHouse
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Andy Graham, Vice President, Modern Heating & Plumbing
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Larry Moore, Owner, A Company Portable Restrooms
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.
Pete L.
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
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Michael J Polarek, President, Paragon Packaging
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.
Michael J Polarek, President, Paragon Packaging
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse