Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast #161 - Private Equity vs. Co-Investment: Strategies for Scaling Small Businesses
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Jan 16, 2025 Exploring growth strategies in the home service sector, this discussion highlights the critical role of partner trust. It contrasts minority versus majority ownership, emphasizing co-investment as a valuable alternative to private equity. Real-world examples illustrate financial risks, like personal guarantees and the loss of control. The conversation dives into the complexities of partnerships and the importance of legal scrutiny in contracts, shedding light on how the right alliances can drive substantial business improvements and operational successes.
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Co-investment Partnership
- Consider co-investing with high-level players for operational improvements and best practices.
- This offers advantages similar to private equity but with a focus on operational expertise and true partnership.
PE vs. Best Practices Partnership
- Private equity excels at securing better deals and cheaper purchasing, but lacks operational understanding.
- A best practices partnership offers operational expertise and elevates a business, rather than leveraging it for profit.
Minority vs. Majority Ownership
- Stepping into a minority position may limit access to resources and cost structure benefits.
- Majority ownership is often required to maximize the value and effectiveness of such partnerships.