Fear Factor

A lot of folks who have founded and grown fantastic small and mid tier businesses misunderstand the role and value of private equity investment in their business. Many fear private equity. There is no need.

Flavors of Private Equity

Private Equity comes in a number of flavors. There are Venture Capital firms, Growth Equity firms, and Leveraged Buyout firms. For purposes of this blog, we will focus on the Leveraged Buyout flavor of Private Equity. Why? Because this is a blog for the shareholders of mature, successful small and mid tier firms. Firms in this category are past the "Venture" financing stage and will typically have access to lower cost capital than might be available through a Growth Equity firm.
Within the LBO "flavor" there are PE firms that are backed by "hedge funds" that tend to focus on short investment horizons and are looking for controlling interests in distressed or otherwise "undervalued" investments. Then, there are PE firms that are backed by a combination of wealthy individuals, institutions, insurance companies and pension funds who are focused on generating excellent returns for their massive portfolios. These firms typically have longer investment windows and generally work in partnership with strong management teams to fuel profitable growth leading to an eventual "exit", or series of "liquidity events" that yield returns to the fund's limited partners. Based on my exposure to a number of investors in this strain I would pronounce these folks as the "good guys" - in that they are the kind of people and investors that you might like to have as a business partner.

But, this really isn't about "them"...

This blog is about how shareholders in small to mid tier companies can (and should) tear a page out of the Private Equity playbook and behave more like a Private Equity investor - i.e. they should think of themselves as "Very Private Equity".
I hope you find it interesting.