We ended up selling to the most founder-friendly, culture-is-important PE firm we could find and, to their credit, they gave us every chance to keep running the business our way, while giving resources we wouldn’t have access to.
As soon as we missed a target the screws were tightened, they began injecting “experts” to run portions of the business, and pushed out our most experienced folks throughout all levels of the business.
From there, performance fell, and the screws were tightened further.
What I’ve been impressed by: everyone at the PE firm and the people they introduce are very experienced and very smart
What’s been disappointing: no one is trying to innovate. Everyone is trying to follow a framework of what has been done before, copied ad nauseum.
The idea of doing things even remotely different from the “big players” in the space is shut down, and we essentially try to emulate them instead of leaning into what made us successful, and attractive to PE firms in the first place.
The conditions of the deal were fair, we sold >60% of the company, with a majority of the proceeds being paid in cash up front l, some tied to near term performance, some tied to longer term.
PE is very much a mixed bag. If you play their game, they’ll love you. If you’re contrarian or challenge their thinking, they don’t love it.
> Michael Moore, the chief executive of UK Private Capital, an industry body and trade association, says private equity uses “leverage” responsibly. In finance, leverage is the use of debt to increase returns gained from an investment...
> ...Crucially, private equity firms succeed by building stronger, more valuable businesses over time, so it is firmly in their interests to ensure debt levels are sustainable.
Anyone can say these things. Demonstrate them with raw data and facts.
> When asked about the negative side-effects of private equity’s profit maximisation, Moore says: “Private equity firms professionalise businesses, helping them adapt to the challenges of the energy transition and tech disruption, with both the capital and expertise that makes them competitive.”
Hey UK Private Capital, hire me as the Chief Executive and I'll easily do Moore's job for 70% of his salary, cutting your costs as well and getting your investors a higher return.
That's your goal after all isn't it?