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The Benefits of Private Equity - A Case Study

By Generational Equity

Private Equity Case Study

A few weeks ago I was chatting with one of our executive conference leaders (the folks that lead our conferences which are designed to provide business owners with an educational foundation on exit planning) and he told me that he was again surprised at how few attendees realized the benefits of considering a private equity firm as part of an exit strategy.

Based on our own research, this never surprises me!

Far too few business owners realize that a major proportion of business buyers is comprised of teams running private equity firms. Most of the business owners we interact with have no idea that in their industries there are countless PE firms operating under the radar screen, investing and funding in companies just like theirs.

I was recently reminded of this when I came across an announcement that Continental Batteries had acquired Metroplex Battery and Ellis Battery, leading distributors of aftermarket batteries to the automotive, commercial, golf and marine markets.

Turns out that this was the eighth acquisition for Continental Batteries in just nine months – and that the funding for these acquisitions was coming from Incline Equity Partners.

Incline made an investment in this company and this niche because of the opportunity they see in the growth of both:

Incline Value Enhancement:

A partnership with management to acquire the Company from family ownership. Management made a meaningful investment in the company as part of the transaction. To do the following:

  • Support organic growth within existing footprint and new geographies
  • Drive M&A activity
  • Develop and augment management team to support future growth
  • Improve operational performance through investments in infrastructure & technology

As we have seen before with other PE firm transactions we have highlighted, this is truly a win-win-win scenario for the PE firm, the management of the platform company (Continental Batteries), and future add-on acquisitions it plans to make.

The “value enhancements” that Incline proposes to bring to the deal cannot be overstated. So many privately-held businesses that we encounter are in desperate need of capital infusion, yet so many have no idea that an equity firm can provide not only the funding they’re seeking, but also the operational expertise to help the company grow.

The good news is that we can create the connection.

About 30% of our transactions every year are with PE firms. We know not only how to find them, but how to prepare our clients to be buyer-ready for PE firms (not an easy task in many cases).  

If you are the owner of a privately held company and you are wondering if PE firms might find your company of interest, you should attend a Generational Equity exit planning conference soon.

These highly educational, complimentary sessions are held throughout North America and I am certain that most of your M&A related questions will be answered in just a few hours of your time. 

To learn more about our conferences and services we provide, please have a look at the following links:

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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