We may earn commissions if you use the recommended services on this site.  

Key Considerations before Selling to a Private Equity Firm

Latest Business News

Key Considerations Before Selling Your Business to a Private Equity Firm

As a small business owner, the dream of selling your company may be on the horizon. While some opt for selling to competitors, others explore the option of private equity firms acquiring a majority stake and injecting funds for further growth, rather than a complete sale. This approach allows the former owner to retain a minority share and potentially sell it at a later stage when the company has significantly expanded. At BusinessFormation.io, we recently discussed this topic with Jason Hendren, the author of "Things I Wish I Knew Before I Sold to Private Equity." With his expertise as a CEO coach, speaker, and exit-planning advisor, Jason shed light on essential considerations for small business owners contemplating a sale to private equity firms.

Preserving Capital and Planning for a Financial Exit

In the early stages of running a business, it's crucial for startup owners to preserve capital and explore alternative funding options to avoid the time-consuming process of raising money from outside investors. Properly planning for a financial exit is also essential to ensure a smooth transition and maximize the value of your small business.

Aligning Interests and Valuing Your Company

When selling your business, it's vital to align your interests with those of your employees to foster a prosperous future for all stakeholders. Additionally, improving the valuation of your company well in advance of the sale process can significantly impact the outcome. Seek the guidance of experienced advisors who can provide valuable insights during the planning and negotiation stages.

Striking the Right Deal with a Private Equity Firm

Choosing the right type of deal with a private equity firm is a critical decision. Understanding the various options and structures available can help you make an informed choice that aligns with your long-term goals. Consider factors such as control, financial returns, and the level of involvement you wish to maintain in the business post-sale.

Maximizing Returns and Post-Sale Strategies

After selling a majority stake to a private equity firm, it's essential to focus on maximizing your return on investment. Explore strategies to leverage the expertise and resources of the firm to drive further growth and profitability. Additionally, carefully consider your post-sale plans, whether it involves pursuing new ventures or enjoying a well-deserved break. In summary, selling your business to a private equity firm can be a significant milestone in your entrepreneurial journey. By preserving capital, planning for a financial exit, aligning interests, valuing your company, seeking expert advice, striking the right deal, and maximizing returns, you can navigate this process successfully. For more insights, listen to the full interview with Jason on The Small Business Radio Show. Stay tuned to BusinessFormation.io for the latest Small Business News.


Selling a business to a private equity firm can be a game-changer for a new LLC. This strategic move not only provides an exit route for the owner but also opens up avenues for further growth and expansion. The infusion of capital from a private equity firm can catapult a small business into a higher league, offering the potential for exponential returns.

Impact on a New LLC

For a new LLC, this transition can significantly shift the business dynamics. It provides the opportunity to leverage the resources and expertise of the private equity firm, potentially accelerating growth and profitability. The decision to retain a minority stake also offers the former owner a chance to reap further benefits as the company expands.
Future Implications
The future implications of such a move are multi-fold. Selling to a private equity firm can set the stage for a new LLC to evolve into a larger, more competitive entity. It also opens up possibilities for the former owner to explore new ventures, armed with the experience and financial gains from the sale. In essence, selling to a private equity firm can be a strategic pivot that propels a new LLC to greater heights. It's a decision that warrants careful consideration and expert guidance, but with the right approach, it can be a transformative move for any small business.
Article First Published Here: https://smallbiztrends.com/2023/10/selling-to-a-private-equity-firm.html
Learn How To Get an LLC here: LLC Filing Steps

LLC Filing & Registered Agent Services

Compare Online LLC Filing Services Today

We work with the market leaders in business formation and registered agent services.

Getting started is simple and inexpensive. Form your business today & secure your brand name before someone beats you to it! Click below to view the Top 3 Best LLC and registered agent service providers.
View Top 3 Providers Now

Filing An LLC Can Be Complicated

Streamline Your LLC Filing Online for $39

Northwest Registered Agent is the best-rated service for first time filers.

Get professional LLC formation & registered agent services for only $39 + state filing fee. This offers includes your full LLC setup, plus a private business address, lifetime support, and more.

Trusted by Millions. Save 82% Today.