• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Research
    • Markets & Technologies
    • Raw Materials
    • Top Companies
    • Directories
    • Jobs
    • Events
    • Microsites
    • More
  • Magazine
  • News
  • Research
  • Markets & Technologies
  • Raw Materials
  • Top Companies
  • Directories
  • Jobs
  • Events
  • Microsites
  • Current / Back Issues
    Features
    Business Corner
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Subscribe Now
    Advertise Now
    World Reports
    eBook
    Top Features
    Pigments Market

    The Architectural Paint Market Enjoys a Strong 2022

    The Buyers’ Guide

    Auto Refinish Market

    The 2022 Protective Additives Directory
    Breaking News
    Online Exclusives
    Distributor News
    Financial News
    Paint & Coatings Manufacturer News
    People In the News
    Price Increases
    Product News
    Raw Materials & Equipment
    Video Bites
    Suppliers News
    Live From Shows
    Top News
    Epoxytec Announces New Website Launch

    Paints and Coatings Market Worth $212B by 2026: MarketsandMarkets

    Axalta Releases Fourth Quarter and Full Year 2022 Results

    AkzoNobel Using 100% Renewable Electricity in North America

    Program for BIG IDEAS for UV+EB Technology 2023 Announced
    Top Companies report
    Market Research
    White Papers / Tech Papers
    Technical Papers
    Product Spec Sheets
    World Reports
    Adhesives and Sealants
    Aerospace Coatings
    Architectural Coatings
    Automotive Coatings
    Automotive Refinish
    Business Operation
    Color Trends & Forecast
    Construction Chemicals
    Corrosion Control
    Industrial Coatings
    Laboratory Equipment
    Marine Coatings
    Market Trends & Forecast
    Powder Coatings
    Production Equipment
    Radcure Coatings
    Special Purpose Coatings
    Wood Coatings
    "Green" Coatings

    Epoxytec Announces New Website Launch

    Advanced Polymer Coatings Lands Multiple Turkish Tanker Deals

    Rust-Oleum Names Gloss Grape as Spray Paint Color of the Year

    Cortec Launches EcoAir Biobased Outdoor Coating

    Chrome Alternative from AkzoNobel Saves Turkish Bike Manufacturer 40% on Energy Costs
    Additives
    Binders
    Pigments
    Solvents

    Univar Solutions Announces New Distribution Relationship

    OQ Chemicals Invests in Capacity Expansion to Support Carboxylic Acids Market

    Solvay to Relocate to New Headquarters

    Peninsula Polymers Awarded Bronze Sustainability Rating from EcoVadis

    Project Air to Receive €97 Million Under Agreement with Innovation Fund
    Company Capabilities
    Buyers Guide
    Distributor Guide
    Add New Company
    International Buyers Guide Companies
    Clariant Additives

    Arkema

    Shepherd Color Company, The

    Siltech Corporation

    EPS
    Industry Events
    Webinars
    Live From Show Event
    Top Events
    Saudi Arabia Coatings Show

    Southern Society for Coatings Technology Annual Meeting and Technology Conference

    Eastern Coatings Show

    CPCA Annual Conference

    66th Annual Sink or Swim
    Companies
    White Papers/Tech Papers
    Product Spec Sheets
    Equipment
    Literature/Brochures
    Videos
    International Buyers Guide Companies
    Clariant Additives

    Arkema

    Shepherd Color Company, The

    Siltech Corporation

    EPS
    • Magazine
      • Current / Back Issues
      • Features
      • Editorial
      • Business Corner
      • Digital Edition
      • eNewsletter Archive
      • Editorial Guidelines
      • Subscribe Now
      • Advertise Now
    • Breaking News
    • Directories
      • Buyers Guide
      • Distributor Guide
      • Corporate Capabilities
      • Trade Associations
      • Add Your Company
    • Markets & Technologies
      • Adhesives and Sealants
      • Aerospace Coatings
      • Architectural Coatings
      • Automotive Coatings
      • Automotive Refinish
      • Business Operation
      • Color Trends & Forecast
      • Construction Chemicals
      • Corrosion Control
      • Industrial Coatings
      • Laboratory Equipment
      • Marine Coatings
      • Market Trends & Forecast
      • Powder Coatings
      • Production Equipment
      • Radcure Coatings
      • Special Purpose Coatings
      • Wood Coatings
      • "Green" Coatings
    • Raw Materials
      • Additives
      • Binders
      • Pigments
      • Solvents
    • World Reports
      • Africa Report
      • China Report
      • India/Asia Pacific Report
      • Europe Report
      • Latin America Report
      • Market Research
      • Russian Report
    • Top Companies
    • Online Exclusives
    • Glossary
    • Slideshows
    • Experts Opinions
    • Blog
    • eBook
    • Infographics
    • Videos
    • Podcasts
    • Whitepapers
    • Jobs
    • Microsites
      • Companies
      • White Papers/Tech Papers
      • Product Spec Sheets
      • Equipment
      • Literature/Brochures
      • Videos
    • Events
      • Industry Events
      • Live From Show Event
      • Webinars
    • About Us
      • About Us
      • Contact Us
      • Advertise With Us
      • Privacy Policy
      • Terms of Use
    Blog

    [Getting to the Altar]: Selecting the Right Private Equity Partner

    ...

    Related CONTENT
    • SI Group Signs Agreement to Sell Industrial Resins Business to ASK Chemicals
    • LSI Launches as an Independent Global Specialty Chemicals Business
    • A Comprehensive Overview of the Construction Chemicals Market
    • Aakash Chemicals Rebrands as Vivify Specialty Ingredients
    • Q&A: The ChemQuest Group
    Mark Miller, Vice President, Huron Capital Partners07.31.15
    For a business owner, partnering with a private equity firm is a bit like getting married.  While there may not be a clear consensus about how many months or years you should date someone before tying the knot, the experts tell us the answer is something like this:  however long it takes to get to know someone thoroughly, to see someone’s best (and worst) sides, and to make sure future plans and goals are in sync.  This same advice applies to selecting the right private equity partner. 

    The due diligence process is akin to dating – it allows time for both parties to get to know one another. Of course, it also provides time for a private equity firm to study certain financial, customer, product, and other data about a company.  But above all, the due diligence period is about ensuring the partnership will work.  No matter the reason you’re selling – retirement, diversification, or general liquidity – selecting the right partner can offer continued value creation for a lifetime. 

    So, what characteristics should a business owner consider when evaluating a potential private equity partner?  Below are five areas that should be assessed during the “courting” process.

    Open Communication.  Businesses should feel comfortable sharing thoughts and opinions about their company with a potential private equity buyer.  Especially in the “getting to know one another” stage, it is vital to the health of the ongoing partnership that you feel understood and appreciated.  The basis for good communication is trust and mutuality – and with trust comes the ability to speak honestly without feeling judged.  If either party feels compelled to hide something because of fear of the other’s reaction, then this is likely not the right partnership. However, if a potential private equity partner is prepared to share information about the firm, people, habits, style, investors, successes and challenges), then you may have found the right partner.

    Shared Goals.  We know that cash flow growth is a primary driver of value creation.  While there are many methods used to boost cash flow and profitability – working capital optimization, capacity utilization and operational improvements are just a few examples – top line expansion either through organic growth or add-on acquisitions can drastically enhance investment returns.  This is why private equity firms create a comprehensive financial forecast, which can come directly from management team input. Huron Capital Partners models the specific impact that many operating and sales initiatives will have on earnings, investment returns and risk profiles.  This financial model is then used as the foundation for the overall investment thesis and growth strategy.  Being in agreement about this strategy is particularly important if you  are planning to reinvest or “roll” a portion of your ownership from the sale of the company and sharing in the future upside.  In all of the platform acquisitions we’ve made at Huron Capital since 1999, all but two included some level of seller/management rollover.  In fact, we encourage owners to reinvest with us and to that end, we prepare and share individual analyses on an open-book basis showing the math behind the projected value for all involved using the assumptions and results of our plans for future growth.    Whether you choose to reinvest or not, establishing a shared vision for the company is crucial to moving a transaction forward. 

    Common Values.   Mutual respect, loyalty, and integrity – the extent to which a private equity partner embraces and embodies these core values drives team dynamics and, ultimately, cultural fit.  One inappropriate interaction or personality can negatively impact deal momentum or kill the deal outright.  If any of the private equity firm’s representatives is missing one of these three values, communication stalls, distrust seeps in, and the relationship may quickly deteriorate.  Consistency and predictability are as valuable to personality as they are to business earnings. 

    The Company You Keep.   It’s true – the group you surround yourself with says a lot about your values.  So, get to know a private equity firm’s team and network and decide for yourself if that’s the type of company you want to keep.  Meet the operating partners, senior advisors, and former and current portfolio company CEOs.   Ask to meet as many of the firm’s colleagues as possible during the due diligence process, and do it without the deal team in the room. A private equity firm’s “extended family” is also important when it comes to appointing a Board of Directors, as a firm will typically rely heavily on its network to fill outside director positions.  Gravitate to a PE firm that involves an industry expert or operating executive during due diligence.  We’ve found that business owners respond favorably to having a business owner peer involved early in the process.  They have been in your shoes before as an owner and operator, and these individuals often end up becoming valued board members and trusted advisors for the management team after a transaction has been completed. 

    For Better or Worse.  As a business owner, you understand that not everything goes as planned.  The loss of a major customer, a product recall, supply interruption, inventory issues, a facility fire – these unforeseen incidents can have a profound impact on the revenue and earnings of a business.  It is important to understand how a private equity firm deals with, or ideally, has dealt with these types of situations.  For example, connect with the management teams of portfolio companies that have been faced with challenging situations and inquire how the private equity investor reacted and how helpful (or not) they were in resolving the situation.  Understanding how a firm copes in both good times and bad is essential to ensuring you’ve selected the right partner.

    To summarize:  do your homework.  While a potential private equity buyer is performing due diligence on the company and management team, business owners should also be doing due diligence on the buyer.  What you learn during this process will very likely be determining factors in who is chosen to take to the altar. Sure, valuation and financial terms will always be important considerations, but you cannot ignore the one piece of advice relevant to both marriage and due diligence:  life is short – choose wisely.
    Related Searches
    • Business Operation
    • fire
    Related Knowledge Center
    • Business Operation
    Suggested For You
    SI Group Signs Agreement to Sell Industrial Resins Business to ASK Chemicals SI Group Signs Agreement to Sell Industrial Resins Business to ASK Chemicals
    LSI Launches as an Independent Global Specialty Chemicals Business LSI Launches as an Independent Global Specialty Chemicals Business
    A Comprehensive Overview of the Construction Chemicals Market A Comprehensive Overview of the Construction Chemicals Market
    Aakash Chemicals Rebrands as Vivify Specialty Ingredients Aakash Chemicals Rebrands as Vivify Specialty Ingredients
    Q&A: The ChemQuest Group Q&A: The ChemQuest Group
    LANXESS Acquiring Emerald Kalama Chemical LANXESS Acquiring Emerald Kalama Chemical
    Huntsman Finalizes Acquisition of Gabriel Performance Products Huntsman Finalizes Acquisition of Gabriel Performance Products
    BASF Agrees to Sell Kankakee, Illinois Site to One Rock Capital Partners BASF Agrees to Sell Kankakee, Illinois Site to One Rock Capital Partners
    Huntsman to Acquire Gabriel Performance Products Huntsman to Acquire Gabriel Performance Products
    Start-up Organizations Partner with AkzoNobel on Global Chemistry Challenge Start-up Organizations Partner with AkzoNobel on Global Chemistry Challenge
    New Mountain Capital Partners With Gelest, Inc. New Mountain Capital Partners With Gelest, Inc.
    CenterOak Partners Acquires Aakash Chemicals CenterOak Partners Acquires Aakash Chemicals
    Blake Dell Promoted to Director at Mississippi Lime Company Blake Dell Promoted to Director at Mississippi Lime Company
    AkzoNobel Launches Global Chemicals Start-up Challenge AkzoNobel Launches Global Chemicals Start-up Challenge
    M&A – Bringing Buyers and Sellers Together M&A – Bringing Buyers and Sellers Together

    Related Breaking News

    • Binders | Breaking News | Industry News
      SI Group Signs Agreement to Sell Industrial Resins Business to ASK Chemicals

      SI Group Signs Agreement to Sell Industrial Resins Business to ASK Chemicals

      Agreement includes products, technology, and manufacturing assets in Brazil, India, and South Africa.
      07.23.21

    • Additives | Breaking News | Industry News
      LSI Launches as an Independent Global Specialty Chemicals Business

      LSI Launches as an Independent Global Specialty Chemicals Business

      Lonza Specialty Ingredients business (LSI) successfully carved out from Lonza Group.
      07.02.21

    • Adhesives and Sealants | Construction Chemicals
      A Comprehensive Overview of the Construction Chemicals Market

      A Comprehensive Overview of the Construction Chemicals Market

      Rise in urbanization is estimated to be the main cause for the surge in the global construction chemicals market in the coming years.
      Chaitali Avadhani , Research Dive 05.17.21


    • Additives | Breaking News | Industry News
      Aakash Chemicals Rebrands as Vivify Specialty Ingredients

      Aakash Chemicals Rebrands as Vivify Specialty Ingredients

      CenterOak Partners rebrands Aakash Chemicals to Vivify, uniting three subsidiaries under new name.
      05.14.21

    • Breaking News
      Q&A: The ChemQuest Group

      Q&A: The ChemQuest Group

      Coatings World interviews The ChemQuest Group and ChemQuest Technology Institute Directors, Karl Davenport and Pete Smith.
      Kerry Pianoforte, Editor 02.18.21

    Loading, Please Wait..
    Trending
    • Sherwin-Williams Announces And Celebrates 2022 Vendor Of The Year Award Winners
    • Axalta Releases Fourth Quarter And Full Year 2022 Results
    • AkzoNobel Using 100% Renewable Electricity In North America
    • PPG Reports Fourth Quarter, Full-Year 2022 Financial Results
    • PPG Names New Packaging Coatings Global Technical Director
    Breaking News
    • Epoxytec Announces New Website Launch
    • Paints and Coatings Market Worth $212B by 2026: MarketsandMarkets
    • Axalta Releases Fourth Quarter and Full Year 2022 Results
    • AkzoNobel Using 100% Renewable Electricity in North America
    • Program for BIG IDEAS for UV+EB Technology 2023 Announced
    View Breaking News >
    CURRENT ISSUE

    January 2023

    • Pigments Market
    • The Architectural Paint Market Enjoys a Strong 2022
    • View More >

    Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
    You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

    • About Us
    • Privacy Policy
    • Terms And Conditions
    • Contact Us

    follow us

    Subscribe
    Nutraceuticals World

    Latest Breaking News From Nutraceuticals World

    Nutrasource Rebrands Clinical Trial Site to Apex Trials
    Kerry Sponsors Upcycled Food Foundation Research Fellowship
    Probiotics Supplementation Reduces Complications in Colorectal Cancer Patients
    Coatings World

    Latest Breaking News From Coatings World

    Epoxytec Announces New Website Launch
    Paints and Coatings Market Worth $212B by 2026: MarketsandMarkets
    Axalta Releases Fourth Quarter and Full Year 2022 Results
    Medical Product Outsourcing

    Latest Breaking News From Medical Product Outsourcing

    MPO's Most-Read Stories This Week—Jan. 28
    Alleviant Medical Closes $75M Financing Round
    Know Labs Founder Ron Erickson Named CEO
    Contract Pharma

    Latest Breaking News From Contract Pharma

    SK bioscience Introduces New Global Partnership Model for Vaccines
    Merck's KEYTRUDA Wins Expanded Approval in Non-Small Cell Lung Cancer
    Bone Biologics Engages Avania for NB1 Clinical Trial
    Beauty Packaging

    Latest Breaking News From Beauty Packaging

    LVMH Reports Record 2022
    Haircare Brand Uncle Funky’s Daughter Announces Retail Expansion
    TRESemmé Introduces New Pro Infusion Collection
    Happi

    Latest Breaking News From Happi

    Alix Earle, Jonathan Monroe Are Fast-Growing Beauty Influencers on Instagram
    Fragrance Creators Launches First-of-its-Kind Data Insights Program
    The Lip Bar Enters the Skin Care Category with First-Ever Skincare Collection
    Ink World

    Latest Breaking News From Ink World

    Weekly Recap: Sustainability and Pigments, TSCA and Raw Materials Top This Week’s Stories
    Roland DGA Announces Major Expansion of TrueVIS Printer Family
    Neos Expands Production Capacity, European Market Presence
    Label & Narrow Web

    Latest Breaking News From Label & Narrow Web

    Channeled Resources launches blank labels with PET liner
    Infigo partners with Four Pees in Benelux region
    EFI appoints Frank Pennisi CEO, Fiery now an independent business
    Nonwovens Industry

    Latest Breaking News From Nonwovens Industry

    Essity’s Sales Grow
    Thinx to Pay up to $5 million to Settle Class Action Suit
    Typar Highlighting New Building Innovations
    Orthopedic Design & Technology

    Latest Breaking News From Orthopedic Design & Technology

    ODT's Most-Read Stories This Week—Jan. 28
    Roche, Sysnav Partner on Movement Tracking Tech for Neuromuscular Disorders
    Orthopedic Braces/Support, Casting/Splints Market to Top $12B by 2030
    Printed Electronics Now

    Latest Breaking News From Printed Electronics Now

    Weekly Recap: Avery Dennison, CES 2023 and Canatu’s LiDAR Deicing Top This Week’s Stories
    Celanese Launches Nine New Conductive Inks
    NREL Develops Thin, Lightweight Layer for Radiation Barrier for Perovskites in Space

    Copyright © 2023 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

    AD BLOCKER DETECTED

    Our website is made possible by displaying online advertisements to our visitors.
    Please consider supporting us by disabling your ad blocker.


    FREE SUBSCRIPTION Already a subscriber? Login