For years, private companies built their businesses in pursuit of the “promised land” of an IPO. Management teams wanted personal liquidity for their years of hard work, access to capital for acquisitions and to “institutionalize” their businesses.
Today, increasingly business owners and managers are choosing the private equity path. They are able to diversify their personal wealth, gain acquisition and expansion capital, and get professional help building their business – but avoid Sarbanes – Oxley, the high costs of being public, the misguided focus on quarterly earnings, and the distractions from their operations.
Here are some of the main reasons why top-performing private companies are increasingly recapitalizing with a private equity partner:
• To have a sounding board for management’s ideas and
 challenges – and end the “lonely at the top” phenomenon
experienced by many CEOs
• To get experienced help identifying, analyzing, negotiating and
integrating acquisitions
• To gain access to “best practices” from other leading companies,
as well as senior-level contacts at potential customers and alliance
partners
• To get help recruiting senior executives and building a strong
Board of Directors
• To benefit from the financial sophistication of private equity
partners
• To add partners with aligned interests who have broad
experience managing and advising growth companies
• To have “two bites at the apple” - partial liquidity in the first
transaction, and a potentially bigger payoff in a later transaction
• To gain additional capital for expansion or acquisitions
• To provide shareholders with partial or total liquidity
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