A private equity sale involves selling shares of a non-publicly listed business to an investor, in exchange for capital investment. Following this, the investor, whether that be a Private Equity firm, angel investor or Venture Capitalist, can take an active, non-executive role in the business. This could involve utilising their skills and connections to propel the business on its growth strategy.
Interested in private equity as a route for growth or succession?
A private equity sale is an attractive option for business owners who want to remain involved in the business and continue in their current leadership role while establishing a route for succession in due course. While retaining ownership, a PE deal can allow the business owner to reduce their personal stake and liability in the business, essentially de-risking the venture while continuing to participate in its future.
There are a number of benefits to undertaking a Private Equity Sale, including:
Case Study
Who: Herida Healthcare
What: A mattress, cushion and accessory manufacturer whose products help to treat and relieve pressure injuries.
Herida Healthcare was acquired by Winncare, a leading manufacturer of medical beds and patient handling equipment, following a private equity investment that will help boost Herida's already impressive growth.
GS Verde advised on the structure of the transaction, and supported throughout the deal itself, to a successful outcome, as well as post-completion.
“The acquisition by Winncare marks the start of an exciting new era for our business. Over the last few years, we have spent time appointing the right people and the right teams in order to grow and with the strength of Winncare behind us, there is the opportunity to escalate this further. I predict a very bright future for us in the pressure area care sector.” – Sean Spencer, Managing Director, Herida Healthcare
Advantages
Relative simplicity and non-disruption: The daily operations, employees, customers, and other stakeholders can remain unchanged – only the ownership structure undergoes significant alteration.
Owner remains in role: Similar to the non-disruptive aspect of a private equity deal the founder or owner can remain in their role and maintain strategic or operational control. A successful PE sale constitutes the backing of the management team’s vision and plan for the business.
Grow board expertise: The sale of equity can bring on new stakeholders, who can provide knowledge, experience, and opportunities. This can unlock new potential for a business, such as specialist sector expertise or access to new networks and channels to further develop your contacts.
Access to capital: In exchange for a portion of shares comes an often significant amount of capital, which can be used for a variety of purposes; investing in equipment, geographic expansion or other forms of growth and development.
Considerations
Thorough due diligence: Before purchasing shares, a potential buyer will undertake due diligence to have a fuller picture of the business. This is likely to include details of the business’ financial performance, corporate structure and more. Experienced advisors such as GS Verde can provide the appropriate support in the preparation and during this process.
Reduction of share ownership: Receiving capital in exchange for shares means business owners will dilute their total ownership. To ensure a business can grow sustainably, it is important for the new shareholder to be aligned with the vision and aims of existing shareholders, especially if the new shareholder becomes a majority investor. Alternatively, equity sales can be completed with minority investors, which are usually non-controlling in nature.
Processes and communication: With new shareholders on board, new processes may be required to provide them with relevant information on a regular basis. This can mean additional work to establish these routines and practises, however, this can result in the added benefit of becoming more structured and organised.
All the support you need, under one roof
The process of selling a business involves several stages, each requiring specialist advisers. At GS Verde, we work as one Group to create your complete business sale advisory team, helping you navigate the journey from planning and strategy to pre-sale preparation, and finally to successful completion. As deal-making experts, the GS Verde Group offers all the necessary expertise under one roof.
To find out if a Private Equity sale is the best route for you and your business, contact us.
Discover how the GS Verde Group can support you
Guilford Street Laboratories, a spin-out of University College London, has successfully completed a pre-seed equity investment in a deal advised on by GS Verde Group.
ClearCourse a leading group of innovative technology brands providing integrated software and payments solutions, has acquired Sellerdeck, in a deal advised on by GS Verde Group.
Winncare, a leading European manufacturer of beds, pressure care products, patient handling equipment, and hygiene solutions has acquired Herida Medical, in a deal advised on by the GS Verde Group.
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