David Bonrouhi, managing director at Calabasas Capital, says 99 per cent of private equity firms add significant value to a company without interfering with day to day operations.
While the multi-billion dollar funds get all the attention in the media, there are many private equity groups targeting privately held businesses with between USD10m and USD100m in revenue.
Calabasas Capital, for example, maintains relationships with over 1,000 such firms.
"Raising private equity does not always mean relinquishing control of a business,” says Bonrouhi. “Many private equity groups are comfortable taking a 30 per cent interest in a company. Those groups that do require a financial interest of 51 per cent or greater, however, typically leave the operating control of the business to the original owner. These groups are looking to partner with the owner to continue to grow the business.”
Bonrouhi says an opportunity for a business owner is to sell a 70 per cent interest in their company to a private equity group, then get second bite at the apple when the business is sold again in five to seven years when the private equity investor needs to harvest the investment.
Calabasas Capital is a financial advisory firm primarily serving lower middle market privately held companies, business owners and entrepreneurs.
