OPERATORS E122: Selling Your Business
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Jul 16, 2025 The hosts dive into the latest trends in mergers and acquisitions, spotlighting minority deals and private equity's pivotal role. They unravel the complexities of deal structures while offering sharp insights on brand age as a valuation factor. With practical tips for navigating the sale process, they emphasize the vital preparation businesses need before engaging with private equity firms. The discussion also touches on balancing financial strategies with personal experiences, making it a rich and relatable conversation.
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PE vs VC Return Mindsets
- Private equity aims for consistent 2X returns, unlike venture capitalists seeking rare 20X home runs.
- PE deals often include structured protections to lock in returns, reflecting different risk and return profiles.
Structured Deals Lock PE Returns
- Private equity tends to structure deals with preferred equity guarantees ensuring returns and downside protection.
- These structures often include liquidation preferences and coupons to secure minimum returns before common equity benefits.
Primary vs Secondary Capital
- VC money usually goes into growing the business (primary capital); PE money often buys shares from founders (secondary capital).
- Understanding primary vs secondary is crucial when negotiating and evaluating deals.
