Selling a business is one of the most significant decisions an entrepreneur can make, and for many, private equity offers an attractive option for growth or exit. In this article, we speak with several experienced private equity partners who share valuable tactics and tips for business owners considering this route. From understanding the valuation process to preparing for due diligence and navigating post-sale transitions, these experts offer practical advice to help sellers make informed decisions and maximize potential deal terms.
Explore our other articles in this series of roundtable discussions with private equity investors:
- The Signs Private Equity Looks for When It’s Time to Sell a Business
- How Private Equity Prepares a Business for Sale to Ensure a Smooth Deal Process
- What Entrepreneurs Often Neglect to Do When Preparing to Sell Their Company to Private Equity
- How Private Equity Determines If a Company Is Prepared to be a Platform Investment
Meet the Panel of Private Equity Partners
The following responses have been edited for concision and clarity.
Erik Dykema
Business owners should be realistic about the sale process and understand that it can be complex and time-consuming. Private equity firms do this for a living, but most entrepreneurs have never been through it before, so being prepared for the challenges is key.
Brendan Forghani
Take the time to slow down, prepare, and invest in the right resources to ensure a smooth sale process. A specific piece of advice is to think carefully about who in the organization will be involved and how you’re going to communicate the sale to employees. It’s usually an exciting time for a company, but there can be rumors and misconceptions. Decide early who’s going to work with the buyers and be part of the process. Some people tell everyone, and others tell no one—it’s an important decision. If it’s framed correctly, it can be exciting. The founder isn’t going anywhere, and you’re bringing in resources and capital to help grow the company.
Ryan Anderson
Spend significant time thinking about the business from the buyer’s perspective. Is it a credible story? Would you want to own this asset?
This is where a good advisor can be invaluable—they ensure the story holds water. Some bankers will tell you what you want to hear and hope for a buyer, but those deals often don’t get done. Instead, time gets wasted, and the business suffers because the founder has been focused on the sale instead of running the company.
My other advice is to plan ahead. It’s a significant amount of work, and while it can be a painful or challenging process, with the right advisor, it becomes more manageable.
Brandon Muirhead
First, no matter how perfect your business is, there are going to be market forces that come into play, for better or worse. It could benefit you, or it could significantly hurt you, and you just have to be mentally ready for the unexpected. Something will go wrong that you’re not planning for—whether it’s an industry dynamic, an employee issue, or financial performance. Something’s going to come up, and you should just prepare for disruption and volatility. I haven’t yet seen a perfect end-to-end process where every single thing went right for a business. So, plan for uncertainty and for things to go wrong. And it’s OK. It’s not going to destroy your process.
Second, really consider who you partner with to sell your business. If you think it’s the right time, consider carefully who you want to represent you. The investment bankers you choose will be an extension of you—and in many ways—they’ll have conversations on the side that you’ll never be privy to. They act as your agent and representative, so choose someone carefully who aligns with your values, understands your priorities, and can also be your advocate in the toughest moments. Take your time making that selection, because there’s almost no bigger choice in driving the outcome.
Finally, there’s no perfect time to sell your business. I’ve been saying this to our own companies—nobody knows what’s going to happen in the future. No one can accurately predict interest rates, tax policy, or other factors with certainty. So, the decision is more of a personal one. Knowing how much you’re ready to give up—whether it’s a minority sale or a majority transaction—is a personal evaluation of what the founder wants in life and for their business. Don’t let market forces sway you or make you feel like if you don’t sell now, you’ll never get a good outcome. In the long run, it’s much more about the personal goals of the founder than trying to time the market perfectly.
Sean McNally
For me, it all goes back to what you’re looking for in a partner and what you want to achieve: Are you planning to retire? Do you want to de-risk over a few years or diversify your net worth while continuing to run the business? Are you open to bringing in other management team members?
Many entrepreneurs are wary of giving up control. So, it’s important to fully understand what giving up control entails and whether you’re truly prepared for that step. If you’re open to bringing in new management team members to help grow and build the business, have you truly reflected on what that means for you and what your role would be going forward?
Once the process takes place and the transaction happens, some aspects may be out of your control. It’s important to understand what you’re comfortable with, where you might need help, and to address your own personal wants and desires before launching a process.
