17 PRIVATE EQUITY | BDO LLP
PREPARING YOUR BUSINESS FOR SALE: UNDERSTANDING PRIVATE EQUITY WHY SELL TO PRIVATE EQUITY? For many tech founders, building and growing a successful business is a lifetime’s work. However, there are a number of reasons why a founder may decide to sell all or part of their company, including decisions around retirement, changing priorities, funding growth, or the desire to cash out and venture into new business opportunities. A potential difference between a PE partnership and an exit to a trade buyer is that, with PE, business founders often remain as part of the management team. This enables you to realise some of the value you’ve created, while bringing on a new investment partner to take the business to the level.
The decision to take private equity investment is one of the most critical a tech founder will make. And if it’s a route you’re considering, there’s a lot to do when it comes to preparing your business, from establishing objectives and incentivising management, to carrying out the appropriate valuations and aligning your exit strategy with your PE investor. The best prepared companies typically start their preparation more than 12 months before they plan to go to market. This is critical to give time for pre-sale planning to be actioned and evidenced. Some tax planning will also need to be in place well in advance of a deal. BDO’s PE expert and Corporate Finance Partner, Derek Neil, provides his insight into the sales process, outlining the key milestones for a successful exit.
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