Private Equity M&A: What You Need to Know

Collision of Galaxies

Partnering with private equity sometimes carries negative connotations. Private Equity Groups (PEGs) speak a very specific language, often leading to clashes between entrepreneurs and PEGs. Several types of Private Equity Groups exist and finding the right cultural fit is critical.

This article outlines several advantages of working with private equity investors and provides tips to help business owners prepare, educate and position their companies to maximize the benefits of PEG participation.


Access to better talent and resources

Private equity firms give founders access to resources they need to accelerate growth.  Resources include funding for new growth initiatives, identifying add-on acquisitions, or recruiting talent.  Private Equity Groups know how to attract talent and view this as a key value driver for their portfolio companies. An entrepreneur’s passion and drive combined with an investor’s resources can advance value creation and financial performance. Selling to private equity allows founders to accelerate their growth alongside a partner with industry knowledge, relationships and experience, which optimizes key value drivers.


Ability to rollover equity

Business owners often have their entire net worth tied up in their businesses, leaving them subject to liquidity risks, especially during periods of high uncertainty. Private equity firms often allow founders to rollover a portion of their equity to align their interests going forward. This allows founders/CEOs the opportunity to cash out on some of their business while maintaining an equity stake that can be sold later. CEOs and founders can use the windfall from the initial sale to diversify their asset portfolio while maintaining enough equity to take a second bite of the apple at a future date.  Oftentimes, founders can roll enough equity that the second bite is bigger than the first.


Opportunity to identify the value of your business

Most businesses are valued in two ways:

  1. Revenue: High-growth businesses are often valued at a multiple of annual gross revenue.
  2. Profitability: Businesses are valued using a multiple of profitability (EBITDA).

The Hancock Advisors team assists business owners with identifying the valuation range that best fits their businesses. Additionally, an advisor partner can help owners take the necessary steps to obtain the full value for their business. While a business valuation can be used to calculate a price tag for your business, at the end of the day, your business is only worth what the market will pay. The Hancock Advisors team has helped owners sell their businesses across a variety of different industries. We have built relationships with leading acquirers throughout previous engagements and developed a strong track record for achieving outsized valuations.

In our experience, two main factors affect whether founders are able to get to the higher end of the valuation range for their business:

  1. The ability to bring multiple bidders to the table.
  2. The proficiency of identifying and tracking value drivers.  Key performance indicators (KPI’s) are different for every company. Tracking KPIs helps to improve the performance of a business, which increases the value of the business and ensures a more efficient sales process. Even if you are not planning to sell your business in the short term, consulting with an advisor partner will help identify and improve business metrics.  In our experience, the best exit processes begin roughly 1-2 years before founders decide that they are ready to sell.


Which operational factors drive business valuation?

When attracting an investor, it is important to consider their positioning and outlook. The operational factors most commonly asked during early discussions around M&A activity include the following:

  1. Systems and Financial Reporting – does your current system track financial metrics outside of profitability?  What is it capable of doing, and who can use it well?
    • TIP: It is hard to track too many things.  If it is a meaningful metric, track it. The most impressive businesses change their strategy and tweak internal operations to reflect the output from system and workflow KPIs.
  2. Management Team – who oversees the business operations? Is there one person or a small group steering the ship?
    • TIP: Empowering the talented and high performers will increase overall business performance.
  3. Sales/Customer Relationships – who is driving sales? Do customer relationships exist at the Director and Associate levels? Are your entry-level salespeople corresponding directly with the recipients of your products/services?
    • TIP: Ensuring strong relationships exist throughout the reporting hierarchy will reassure investors that customers are less likely to leave in the event of employee turnover.  
  4. Customer and vendor Concentration – are you relying on a handful of major customers to hit your revenue targets in 2023?  Are specific vendors responsible for low-cost products or services? What happens if those customers or vendors go away?
    • TIP: Diversification provides leverage in negotiations and brings more buyers to the table.



  • Selling all or a portion of your business can result in a windfall that creates diversification of assets, shielding concentration risk.
  • Private equity partnerships can benefit founders looking to diversify their holdings while maintaining control of their business.
  • Private equity firms can connect founders with people who have years of experience managing businesses specialized in certain industries.
  • The Hancock Advisors team has relationships with hundreds of PE funds and strategic buyers across all industries that can be leveraged to help founders achieve the optimal exit on your terms.
  • With over 100 years of combined transaction experience, the Hancock Advisors team has a strong track record of helping clients achieve outsized valuations on their businesses.


How does an advisor help to sell your business?

With high interest in private market investments, owners should consider exit strategies and long-term growth or potential investment opportunities which may be on the horizon. Despite rising interest rates and economic uncertainty, M&A activity is widely expected to increase in 2023. Hancock Advisors has a strong track record of achieving outsized valuations for clients. Hancock Advisors partners with you to help achieve your business objectives, whether valuing and selling your business, raising capital to fund growth initiatives or performing an acquisition search. We work directly with business owners and investors, specializing in M&A and general corporate finance advice. Our team has 100 years of transaction and industry experience, which we use to help businesses evaluate, navigate, and successfully execute a full range of strategic alternatives.  We work in partnership with Hancock Askew, a regional accounting firm with offices in Georgia and Florida, to provide our clients with expert advice.


Hancock Askew & Co., LLP is excited to announce the merger of its advisory practices, Hancock Askew Advisors and Clarity Capital Advisors, under the unified brand of Hancock Advisors.