Companies with Debt Are Attractive to Private Equity

There are millions of private equity dollars out there looking for good businesses and smart owners. Even if you think your operation is not up to snuff—perhaps it’s not large enough, making too little profit, or employing too few people—you may be surprised how highly others value it.
I can say this because in my experience, I have often been astonished at which businesses are liked and coveted by investors—yes, even those that are not currently profitable.
McGregor Socks, a long serving Canadian company is such a case. After struggling to adapt to the fast changing global market, McGregor knew it needed to add China as a destination for knitting up Canadian-designed creations. It was a private equity fund that put up the money since they already had experience in China. Bringing in partners is a difficult transition but with supportive investors, an excellent Canadian brand continues to fill store shelves (look for a pair of McGregor’s the next time you need socks).
Jacoline Loewen is a contributing author to Peter Merrick's book, The Trusted Advisor's Survival Handbook.

1 comment:

Ali said...

Great example, interestingly I bought a few McGregors before I headed to China last week. I'm now curious to see if McGregor knock-offs have already become available in the Chinese markets.

I've noticed a lot of knock-off products here, and was wondering how companies and their PE partners deal with patent/brand infringement when they add China as a destination.