PE / Private Equity
A Private Equity sale is similar to a Trade Sale, except the entity making the acquisition is an investment fund. More commonly, it may be a trade sale in which the acquiring company is backed by PE investment.
Entrepreneurs Hub provide expert support for business owners throughout the process of a PE sale. From exhaustive research to identify a list of PE firms most likely to invest, to seasoned negotiation of the final deal, we are constantly driving the process forward, advocating for you and your business at every step. Working in partnership with you from day one, our experienced team guide you in preparing for sale and positioning your business to achieve your aspirations, whether that is achieving maximum value, securing the future of your team or helping you take the business to the next level.
A Private Equity (PE) sale involves selling all or a portion of your business to a private equity firm – a type of investment company that acquires and grows businesses on behalf of investors. PE firms typically:
Invest in established, profitable businesses
Use a mix of their own capital and debt
Aim to grow the business over 3–7 years, then exit (e.g., through resale or IPO)
You can sell a majority stake (giving them control) or a minority stake (while retaining significant influence).
Key Benefits
FAQs – Private Equity
What does selling a business to private equity mean?
Selling a business to private equity means selling some or all of your shares to an investment firm. The investor will normally aim to grow the company and generate a future return, although the ownership model, investment timescale and level of involvement will vary between firms.
What is a Private Equity Firm and what do they do?
A private equity firm is an investment company that buys stakes in businesses with the aim of increasing their value over time. They provide capital, strategic guidance and operational support to help companies grow.
Private equity investors often work closely with management teams to expand into new markets, improve efficiency or make acquisitions. After several years of growth, they typically exit the investment through a sale or listing.
Read more to find out what they do in plain terms.
What do private equity firms look for when buying a business?
Private equity firms typically look for sustainable profits, strong cash generation, credible growth potential, capable management and reliable financial reporting. They also assess recurring revenue, customer concentration, owner dependency, market position and whether the business could become more valuable under their ownership.
How does a Private Equity investment work when selling a business?
A private equity investment usually involves selling a majority or minority stake in your business to an investment firm. The founders often remain involved in running the company while the investor provides capital and strategic support to grow the business.
Private equity investors typically aim to increase the company’s value before exiting the investment through a future sale.
Do I have to stay after selling to private equity?
Not always, but many owners remain involved after completion, particularly when they retain or reinvest equity. The length of your commitment will depend on the management team, growth plan and agreed transaction terms. Your role, authority, remuneration and departure arrangements should be agreed before completion.
What is a second bite of the cherry?
A second bite of the cherry is the potential payment an owner receives when retained or reinvested shares are sold during a later transaction. It can create additional value if the business grows, but it is not guaranteed and may be affected by debt, dilution and investor preference rights.
Can I sell part of my business to private equity?
Yes. A private equity firm may acquire either a majority or minority shareholding. A partial sale can allow an owner to realise some of the company’s value while retaining an interest in its future growth, although the investor will usually negotiate governance and decision-making rights.
How long do Private Equity firms hold investments?
Private equity firms typically hold investments for around three to seven years. During this period they focus on growing the business through expansion, operational improvements or acquisitions before exiting through a sale or recapitalisation.
What are the downsides of selling to Private Equity?
One downside of selling to private equity is that investors typically expect strong growth and performance after the transaction. This can involve increased reporting requirements, strategic changes or pressure to scale the business.
Private equity firms also plan to exit their investment after several years, usually through a future sale or recapitalisation. As a result, owners may continue working in the business as part of the growth strategy.
Read more to find out the main drawbacks of private equity.
Is selling to Private Equity a good idea?
Selling to private equity can be a good option for business owners who want to realise value while continuing to grow the company. Many deals allow founders to retain a stake and benefit from a future exit.
Private equity investors can also bring capital, strategic expertise and acquisition opportunities that accelerate growth. However, the structure of the deal and long-term expectations should align with the owner’s personal and financial goals.
For further insights Read more…