• Menu
  • Skip to right header navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

RoseBiz Inc

  • How We Help
  • Why Us
  • Our Successes
  • Blog
  • Resources
  • 858 794-9401
  • How We Help
  • Why Us
  • Our Successes
  • Blog
  • Resources
  • 858 794-9401
You are here: Home / Uncategorized / Private Equity Is Interested in My Tech Business, Now What?
what to do when PE calls selling a business to private equity frim rosebiz inc

Private Equity Is Interested in My Tech Business, Now What?

October 13, 2020 //  by Linda Rose//  Leave a Comment

LinkedIn0Tweet0Facebook0Email0Print0
Reading Time: 4 minutes

How to turn a call from a private equity group into a win-win

Whether selling your company is part of your short-term plans, long-term plans or not even on your radar, getting your first call from a private equity firm is pretty exciting. Afterall, you’ve invested all your energy into building a successful and profitable business, and now someone with deep pockets has taken notice and is ACTUALLY interested in your company. But why are they interested and what does this mean for you? In this post we will share some things you should know to help you turn a call from private equity into a win-win for you and your business.

Why Private Equity Is Calling You?

Somehow your company reached some sort of milestone — you made it onto a big VAR list or made a list like the Inc. 5000, and now the emails and phone calls from Private Equity Groups (PEG) are starting to come in. COVID or not, private equity deals need to continue to happen because bringing a stream of interesting prospects into the firm is the lifeblood of every PEG. So what are their reasons for calling a business like yours?

Here are 4 common reasons a PE firm is calling you:

  1. They want to negotiate directly with you. When PEs reach out directly, they are trying to avoid any competition that might happen if you decide to engage a broker, so they can hope to purchase your company at a discount.
  2. If you engage a broker, they will want to be engaged in the process early so they can build a rapport and be considered when the time comes for you to look at buyers.
  3. They want to develop a personal relationship so that everyone else is compared to them and they can set the bar for a number of items, suggesting all along that they are the “right fit” and firm to partner with. This is called anchoring.  Humans are affected by anchors, the first offer or first impression usually sets the tone for the rest of the conversations.
  4. They may be gathering information for another deal that is similar in size, industry and technology. Or just generally conducting due-diligence on your market space.

Why a Call from Private Equity Is a Win for Your Company

Even if you don’t want to sell to a private equity group, a call from them is a win for your business. Whether you plan on selling soon or in five years, taking these calls will help you better prepare and sell for millions, even if you are set on only selling to a strategic investor.

Here are some of the ways a PEG call is a win for you:

  1. You will learn something with every call.  Never stop learning, so that means continue having these calls but keep them at a minimum and don’t let them get destructive – meaning don’t let someone (a teammate) overhear the conversation and get the wrong idea.
  2. They are a great source of metrics.  PEG’s live and die by the numbers, so if you are looking for benchmarks, these are the guys to get it from assuming they do a number of deals in your industry.
  3. Once you do begin the process of selling your company, even if it is to a Strategic buyer, you already have identified, or know of, it never hurts to have another player in the game.  You just never know where an offer will land, and you want to create a competitive situation. Competitive situations ALWAYS leads to better outcomes for the seller. Plus, PEG’s keep the ball moving forward.  Meaning, if your ideal strategic buyer is lagging in the process, they will be forced to keep the pace of the PEG if they want to stay in the game.
  4. And finally, they may have some good contacts for attorney’s, transaction CPA’s, firms who can prepare a Quality of Earnings Report, or provide referrals to people who might be able to fill open management roles within your organization.

How to Tell If Your Business is Right for a Private Equity Group

Private Equity has historically NOT looked at anything less than $5M in
revenue and $1M in EBITDA, but those views on size and revenue have
changed and PEG’s are even looking at companies half that size.
Despite the economic slowdown caused by the current pandemic,
Private Equity is sitting on anywhere from $1.5 – $2.5T (yes trillion)
dollars of “dry powder” (money they need to invest) in the next few
years, so while many strategic buyers are conserving cash at the
moment, PE’s are charging full-steam ahead.

Would you like the expanded e-book version of this for my five tips on
how to handle the Private Equity call? Download the full version
here: http://bit.ly/PE_calls

LinkedIn0Tweet0Facebook0Email0Print0

Category: UncategorizedTag: mergers and acquisitions, Selling Your Business, Selling Your Dynamics Cloud Practice

Previous Post: «linda rose rosebizinc why technology businesses sell for less than they should 5 Common Reasons Why IT Businesses Sell for Less Than They Should
Next Post: The importance of understanding “Adjusted EBITDA”: Revised for COVID 19 »

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Getting calls from Private Equity?
 
Whether selling your company is part of your short-term plans, long-term plans or not even on your radar, getting your first call from a private equity firm is pretty exciting.

But why are they interested and what does this mean for you?

In this PDF we will share with you the WHAT, WHY and HOW to take a PE Call.
 
Download the guide on how to handle a Private Equity call


Linda Rose Get Acquired for Millions Book

Stay Connected

Fields marked with an * are required


You can change your mind at any time by clicking the unsubscribe link in the footer of any email you receive from us, or by contacting us at linda.rose@rosebizinc.com. We will treat your information with respect. For more information about our privacy practices please visit our website. By clicking below, you agree that we may process your information in accordance with these terms.

GDPR

We use MailChimp as our marketing automation platform. By clicking below to submit this form, you acknowledge that the information you provide will be transferred to MailChimp for processing in accordance with their Privacy Policy and Terms.

Recent Posts

  • Is an Individual or Management Team Buyout Right?
  • Observations on IT Deal Flow for Q1 – Global Market Down 23%
  • My Office Just Burned Down to the Ground – The 6 Documents You Should Store In The Cloud NOW

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • July 2019
  • January 2018
  • October 2017

Footer

Resources and Links

  • M&A Advisor
  • Advisory Board Services
  • Speaking Engagements
  • Resources
  • Assessment
  • Book: Get Acquired for Millions
  • PersonalScore

RoseBiz, Inc.

  • Why Us
  • Contact Us
  • How We Help
  • Blog
  • Media

Join Our Newsletter

Fields marked with an * are required


You can change your mind at any time by clicking the unsubscribe link in the footer of any email you receive from us, or by contacting us at linda.rose@rosebizinc.com. We will treat your information with respect. For more information about our privacy practices please visit our website. By clicking below, you agree that we may process your information in accordance with these terms.

GDPR

We use MailChimp as our marketing automation platform. By clicking below to submit this form, you acknowledge that the information you provide will be transferred to MailChimp for processing in accordance with their Privacy Policy and Terms.

Copyright © 2022 RoseBiz Inc. | Privacy Policy | Terms and Conditions

This site uses cookies to store information on your computer. Some are essential to make our site work; others help us improve the user experience. By using the site, you consent to the placement of these cookies. Read our Privacy Policy to learn more. Accept
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT
Share this ArticleLike this article? Email it to a friend!

Email sent!