LETS TALK PE MINORITY EQUITY: THE ALTERNATIVE SALES STRATEGY
APRIL 26, 2018
Thinking about growing your business but don’t have the means to support and/or fund your growth? Growing a business does not happen overnight and often times requires outsourced mentors or assistance.
In a special Gerber Discovery + Ice Miller speaker series collaboration, Charlie Sheridan from Huron Capital discussed private equity (PE), minority equity as the alternative sales strategy. Sheridan touched on a few of the possible uses of minority equity including:
- Add-on Acquisitions
- Facility Expansion
- Debt Pay Down
- New Product Line Launch
- Sales & Marketing Investment
- Management Buyout
- Family Generational Issues
- Shareholder Liquidity
Below are a few highlights from the event to keep top of mind as you explore a PE minority equity partnership.
Getting an Investor Doesn’t Mean Losing Control | The benefit of minority equity is that the business owner retains operational control and majority equity while gaining access to capital and a support system to fuel business growth!
Gain More Than Capital | Minority Equity investors can serve as partners bringing more value to the table than just means for expansion. Investors can provide operational support, aligned business interest, sales experience, financial flexibility and minimal dilution to execute growth plans.
Pump the Breaks | Ensure you are ready to engage in a partnership. Start by evaluating these four key considerations:
- Need to be relationship-oriented and willing to work together to make board-level decisions and resolve conflict.
- You need to have a plan!
- Be prepared to negotiate.
- Minority investors need to see return within 4-6 years. If the business is not performing well, minority investors can assume majority control to get the business back on track.
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