Using Other People’s Money to Exit Your Business

Exit Planning_Private Equity Succession PlanningIf you are the owner of a mid-sized business, you may think you have no reason to consider Private Equity when planning for your business exit. I understand why you might think that. Private Equity has received quite a bit of media coverage over the last few years, due to Mitt Romney’s bid for President. Like most mass media infatuations, much of the information disseminated about the Private Equity industry was distorted or untrue. It seemed that Private Equity was blamed for most of the ills of modern society.

Despite what the media says, Private Equity is a real industry, and it is here to stay. It is estimated that 10 million people are employed by companies owned by Private Equity Groups (PEGs). It is also estimated that, right now, PEGs have over 1 Trillion dollars of committed capital, of which 600 Billion dollars is earmarked for buyouts and acquisitions. PEGs have become a driving force in buyouts, and they are aggressive investors in both large and middle market companies.

Over the years, I have creatively used Private Equity to achieve a wide variety of financial objectives for my business owner clients. I have used Private Equity to accomplish goals such as the diversification of wealth, the buyout of retiring or disgruntled shareholders, and also to transition the company to management or to the next generation of family.  I have also used Private Equity to fund organic growth in situations where the entrepreneur did not have access to conventional sources of growth capital.  Lastly, I have used Private Equity as a means to generate wealth for my clients by creating partnerships between both parties that enable them to pursue consolidation or other growth strategies.

In future articles, I’ll describe some of these additional ways that you, as a business owner, can take advantage of Private Equity funding. All of these can help you use OPM—“other people’s money”—to achieve your own financial and lifestyle goals as you create a viable Exit Plan.


About Gary T. Brooks

Gary T. Brooks has over 27 years of experience in the investment banking industry and has been involved in over 100 transactions. He is currently the CEO of ExitPlanPros, where he helps business owners grow their business while planning their exit.

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