Business owners who have started their business from scratch, usually have a very close and personal relationship with their business. It is their lifeblood, and they have invested their time and their money in the dream of creating a long-lasting success. At EY we meet a lot of entrepreneurs not least because of our yearly EY Entrepreneur of the Year -program. Through the program, and also working with our clients in other occasions, we often see owners looking toward a sale at an early stage. This is why we put up some thoughts of what you could, or maybe should already ask yourself if a private equity firm knocks on the door of your company.
5 questions to ask yourself when approached by a private equity firm:
- Are you ready for a dialogue?
Do you know the value of your company? You might not be looking to exit but the process of preparing a sale and having robust valuations can also be useful and profitable in the strategic development of your business. And it keeps you prepared if someone wants to buy or invest.
- What is next level?
How do you want to develop your business? Are there opportunities that you do not focus on today? What are the barriers to growth? And what does the private equity fund see as opportunities? Remember that they think about exit opportunities from day one, so you are not planning 25 years of partnership – instead you want to look three to five years ahead.
- What role can you have as an owner?
In some cases, a sale is a permanent exit for a former owner – in other cases it is important for all parties that the founder of the firm is onboard and keeps driving the company forward. As an owner, are you ready to say goodbye? And can you accept a changed role?
- What would family, customers and employees say?
You’ve had a dream of developing the business, and if you are the majority shareholder, it’s your choice whether you want to let others take over. But you should also consider how those around you will react to your decision. For a new owner, customers and key employees are most likely important to keep.
- Is there a good connection?
Regardless of whether you will have a role in the further development of the company or not, a good dialogue is not only about money but also about ambitions, dreams and opportunities. It is important that you feel that you meet people who want something and also demonstrates insight and skills – do they share your purpose and your passion?
Reflecting these thoughts with a third party is often fruitful. As we work with both entrepreneurs as well as with private equity firms on a daily basis we can bring insights and fresh ideas to the table – could exit to grow also mean growth backed by an IPO?
Tilintarkastuksen partner Juha Hilmola on työskennellyt 20 vuotta eri toimialojen kotimaisten ja kansainvälisten yritysten tilintarkastuksen ja neuvonannon parissa. Hän on myös EY Entrepreneur of the Year –kilpailun Pohjoismaiden johtaja.
Senior Manager, KHT Päivi Pakarinen vastaa EY:n listautumispalveluiden koordinoinnista Suomessa. Päivi työskentelee asiantuntijana EY:n yritysjärjestelypalveluissa, ja toimii monipuolisesti yritysjärjestelyihin liittyvien neuvonantopalveluiden parissa. Hän omaa laajan kokemuksen viimeaikaisista listautumisprosesseista Suomessa, erityisalueenaan listautumisedellytysten selvittäminen ja listautumiseen liittyvät taloudelliset analyysit.