Private equity buyer
A private equity buyer is a financial buyer that acquires a company to grow it and sell it again, either as a platform to build on or as an add-on to a company it already owns.
In a sale
Why does a private equity buyer ask the founder to roll equity?
Because it plans to sell the business again, and a founder who keeps a stake and stays involved shares in that next sale: the rolled equity is paid out when the buyer sells, the second bite. A private equity platform discounts owner dependency heavily, because a platform that depends on one person cannot be built on. An add-on buyer pays for what fills a gap in the platform it already owns.
Where it comes up
Read it in context
In the articles
- Same business, two outcomesTwo identical businesses, one prepared and one not, sell for very different prices.
- The second biteIn the right recap, the second sale is larger than the first. In the wrong one, it is zero.
- When a buyer calls firstAn inbound offer is information, not a decision.
- Strategic, platform, add-on, sponsor: who buys whatDifferent buyers pay for different things. The process should include several.
- Real estate and the operating businessOwner-held real estate is a second transaction inside the first.
- What the buyer's memo says about youBefore any offer, someone writes an internal memo. Here is what is in it.
See the terms with your own numbers
The Go-To-Market Analysis (GTMA) builds the file a buyer would build on your business, before a buyer does.