You may get a phone call from private equity, but be aware that only 5% of companies contacted actually get an offer. Shocking as that might be, owner-operators go to private equity thinking they are prepared and then are bitter that their time was wasted.
As a financial advisor to owner-operators, our team is constantly discussing how to show our value-add to potential clients. We help owners access fantastic private equity partners, get their valuation higher than they could on their own and then help them through the five years of partnership.
Owner operators are getting phone calls from private equity funds and not preparing themselves properly. They think they can just show up with out knowing how a Private Equity partner works, what they want and their hot buttons.
Here's a good article in the Globe and Mail about selling a company that I thought you may find interesting and thanks to Winnie Chou. She picked up this article and has some excellent points. Winnie says,
The interesting part is from the initial prospecting, the Riverside fund sent an introductory letter to 30% of the total list of companies and from that pool, the fund sent an LOI to less than 5% of the companies.
So even though a company may feel like they are being targeted by a big fund, the chances of an actual deal occurring are slim and often, the business owner will not receive an offer without knowing what they did wrong in the meeting.
