Examining How A Private Equity Partnership Can Help Your Business Grow
If you are a risk-taking multi-unit franchise owner and looking to grow your business quicker, you may be considering private equity. Before you jump in , consider the following questions for “How do you get IN, and HOW do you get OUT?
From the “How You Get In” consider the following questions:
What are the options available to securing debt?
Where does private equity fit?
Is your corporate structure appropriate for private equity?
What are the “trendy” brands?
Is it a good time to go to market?
The biggest question to consider, which is why it gets it’s own paragraph is Does engaging PE fit with my long term plan? You can evaluate this question best by considering 4 key areas – Ownership Control, Successor Development, Team Performance and Culture.
Ownership Control: Are you ready for another voice in the room? Giving up ownership means giving up some control, which makes any entrepreneur squirm in their seat.
Successor Development: Grooming a successor in the shadow of a private equity partner may be the most effective approach to advancing your culture into the next generation. A private equity partner strengthens an anti-entitlement position.
Team Performance: Once accountability comes into the spotlight, there is less room for average performers and managers battling with complacency.
Culture: Growth for the sake of growing can often lead to doing twice the amount of work to earn the same amount of money. Maximizing internal growth, people development, and process refinement may be needed before focusing on external growth.
Next step is considering How You Get Out:
The average time a private equity partner will be engaged is five to seven years. Assuming everything goes as planned, there should not be any surprises when the time comes to cash out the partner. However, the unpredictable will be dealt with in the fine print, and this is where a lot of focus should be at the beginning of the relationship. Agreements are meant to preclude disagreements
It is worthwhile to assess your paradigm before engaging with a third party, as they are likely assessing you in this area as well.
Read the article and then reach out us to get some insights on your own situation. A few moments with us will provide you insight and clarity for your next steps forward. Contact Us
The Succession Planning Matrix
Want to have control over the future of your business? The best way to do just that is by having a plan. Our approach in considering the 10 key areas of the Succession Matrix simplifies a complex planning environment. Click the following link for more drill down resources on The Succession Matrix