Insights & Info

Insights > Understanding How Private Equity Firms Operate

Understanding How Private Equity Firms Operate

By Generational Equity

Private Equity Operates

From time to time we like to highlight deals in the news because they often illustrate how professional buyers operate. A perfect example was the recent announcement that Riverside Company, a leading lower middle market private equity firm, was selling one of its portfolio companies, Tate’s Bake Shop, to Mondelez International for $500 million.

The reason this deal caught my eye was twofold:

  1. How much (and quickly) Tate’s had grown while held by Riverside
  2. The real hands-on help Riverside provided to Tate to make this growth possible

According to the press release:

Riverside invested in the Southampton, New York-based cookie and baked goods specialist in 2014. Tate’s saw sales and earnings increase 4x during the last five years.


Key initiatives during Riverside’s investment included the significant expansion and improvement of processes around production, deepening of existing customer relationships, expanding distribution, new product launches and boosting the national sales and marketing team, which helped double brand awareness.

Now some might argue that Tate’s might have grown just as quickly without the help of Riverside. However, I highly doubt that when you consider all the significant initiatives that Riverside set in motion while holding Tate:

Riverside’s operational capabilities were key to the success of the investment. The firm helped Tate’s implement new processes, build out the management team, enhance distribution and improve packaging—all while maintaining quality and continuing to grow sales with new and existing customers.

Benefits of a Private Equity Firm

This transaction highlights what we have been saying for years to many of our clients: Partnering with an equity firm that specializes in lower middle market acquisitions can be a real win-win for all parties.

Although details of the original acquisition were not disclosed, based on our experiences, these equity firm transactions are often created via “partial sales”. This is where 51% or more of the target is acquired by the equity firm, existing management is retained, and the new company is further invested in by the equity firm, helping it grow dramatically.

And these firms don’t just focus on financial engineering. They often, as was the case with Tate’s, provide leadership guidance, marketing and sales muscle, and extensive market knowledge to guide the portfolio company to greater heights.

Many of the business owners we work with often have tremendous ideas for growing their companies; they often simply lack capital and people/expertise to implement their ideas. Private equity firms like Riverside have access to both.

Discover Exit Strategy Tips at an Executive Conference

If you are interested in learning more about how professional buyers like Riverside can be great partners for your company, you should attend a Generational Equity educational exit planning conference.

While there, you will not only learn a tremendous amount about the exit process (and how to do it right), you will also be able to meet one on one with our professionals and they can provide ideas that pertain to your specific situation/goals/timing. After this, you will have a clear understanding over whether partnering with a private equity firm is in the best interests of your financial legacy.

To learn more, call us at 972-232-1121 or use the following links:

By Carl Doerksen, Director of Corporate Development at Generational Equity.

© 2018 Generational Equity, LLC. All Rights Reserved.

Make an informed decision

The best decisions in life are informed decisions. We release educational business insights like this every week. Subscribe to make sure you don’t miss the latest news, views and analysis.


Success, you have been added to our list.

I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
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
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!
Andy Graham, Vice President, Modern Heating & Plumbing
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
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.
Michael J Polarek, President, Paragon Packaging
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.
Robert Evans, President and CEO of Mealtracker Dietary Software
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.
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.
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
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
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
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
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
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
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
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
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.
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms