If you’re looking to sell your company in the near future, you may have more potential buyers than you realize. While the private equity industry faced a lull at the beginning of the pandemic, investment activity has been growing since last summer. During the first quarter of 2021, U.S. midmarket private equity firms completed 776 deals worth a combined $119.5 billion — marking the second-highest quarterly deal value on record, behind just Q4 2020, according to the research firm PitchBook.
The rise in investment activity is expected to continue for the remainder of 2021, which has implications for your business. Here are three tips if you are considering selling your company.
Consider multiple exit strategies.
A business exit strategy is a plan that a founder or owner of a business makes to sell their company, or share in a company, to other investors or other firms. Having multiple exit channels will greatly help your business to thrive.
Don’t be in a rush to sell.
The first step to succeeding as a business is to build a brand. Spend more time and resources in customer satisfaction. Having a passionate customer base helps your business survive challenges.
Investors are more likely to invest in companies with build trust and loyalty with their consumers.
Pick the right PE partner.
If you do decide to sell a minority or majority stake in your company to a PE firm, pay attention to making sure it’s the right one. You’re likely going to receive multiple offers from PE firms, and choosing the right partner is about much more than just fetching the highest valuation possible.
“It’s the people you are partnering with and their fundamental style, and whether it is a fit,” says Prelude Growth co-founder Alicia Sontag. PE firms that have good relationships with their portfolio companies can assist with providing sound resources, improving company culture, and implementing strong leadership.