Page 25 - Wealth of Experience - Selling a Business 2019

CASE STUDY

SELLING TO

PRIVATE EQUITY

We weren’t a particularly They restructured the Board and I In terms of preparation for sale, get on
good fit for a trade buyer remained alongside the other joint top of your due diligence. Make sure
or a merger and knew the Managing Director. After a while they there’s nothing that the private equity
made me CEO and made my partner
house can bring up to ‘chip’ you on at
best deal we were going Property Director. the last minute. We were able to come
to get was through private out smelling of roses because we
equity. Private equity can take a while to get made sure that everything that went in
your head around from a technical
As a restaurant group that had been perspective. We had a walkaway price the data bank was bullet-proof.
going for 20 years, we’d paid our set in stone but the firm tried to strong On the due diligence side, we didn’t
debts off and were able to manage arm us at the last minute. You don’t receive any advice. However, if I was
expansion with positive cash flow. The want to be greedy, but you need be selling a business again, I would do
overall aim was to achieve a liquidity fair to yourself. it differently; good advice really takes
event for shareholders. some of the risk out of the deal.
It’s a bit of a shock getting into their
When we sold, the private equity world. They carry a certain reputation.
market was incredibly ‘hot’ in the I could have prepared myself better
restaurant sector. We met some - the culture gap was massive. The “Could we have done a
private equity firms through a guys they initially put on our board deal without corporate
corporate finance company. Originally didn’t speak our language. They were finance? Yes. Could
there were eight PE houses involved. incredibly bright guys but not the best we have got as good a
for the company. In fairness, they price? Absolutely not.”
changed them and now we’re in a
“The overall aim was much better position.
to achieve a liquidity The world of owner managed
event for shareholders.” businesses is very different from that Spending on the corporate finance
of private equity. There was a sense side definitely helped us out over
of disconnect. Post-sale I think it the course of the sale. The firm we
would be fair to say that I don’t think used were really experienced in our
The buyer we chose were the right they placed enough emphasis on our sector. It takes time to get to know
sort of size for us, having met them understanding of our business. your advisers and see if they have
several times it seemed like they ‘got With private equity you relinquish a lot the mettle for the job.
us’. The relationship was important of control over your business. When
but of course this has to be supported we did the deal, I knew deep down
by the commercials; they were offering we’d lost control of our business. It’s
comparatively good numbers for our also about return on investment for
sector. They also had experience, they everyone around the table. It’s just
had a restaurant group within their there can be different ideas about how
portfolio and ended up buying a large to get the maximum returns. There’s
portion of the business. certainly differences of opinion.

25