Private equity investor Justin England from Five V Capital shares valuable insights into what modern PE firms look for when it comes to partnering with SMEs.
Let’s bust a few myths: Private equity buyers aren’t sneaky, sharp-suited dealmakers looking to lowball and flip your business like a used car. The reality? We want to pay a premium for businesses that fit our model. We’re less interested in games and more interested in getting to know founders and their business’ story.
The Old Playbook Is Out
A decade ago, selling your business might’ve meant packaging it up and running a big auction, playing strategic buyers off against each other. That’s changed. The sheer scale of money in private markets (the “weight of capital”) means financial buyers like private equity are now often the ones paying the top dollar for SMEs.
What’s attractive to Private Equity right now?
Intimacy:
We want a deep understanding of what makes your business tick. That means clean books, no surprises, and a founder who’s keen to work together on growth—not someone looking to vanish at settlement.
Growth Story:
Private equity loves potential. Have you shown how the business could expand, domestically or globally? Is there an untapped market or new product we can back?
Quality of Team:
We look for businesses with empowered management teams. If you’re the only one who can run things, that’s a risk not a selling point.
Why Earnouts Are Falling Out of Favour
Performance-based “earnouts” used to be standard. Now, most PE firms try to avoid them. Earnouts can cause tension, misalignment, and distract everyone from real growth. A clean deal, with aligned goals and a clear growth plan, works far better.
Building Value Together
Here’s what to expect: You won’t have to “train us to run your business.” Private Equity firms are not operators, and we don’t pretend to be! But we do bring pattern recognition, capital, and a relentless drive to scale - often alongside families and founders who know their industry best.
So if you’re planning a business sale , get your story straight, lock in your management team, engage professional advice early and start talking to potential investors. The more you and your investors get to know each other, and the less ‘show’ and bluff that goes on, the better the result for everyone.
Justin England is a Managing Director and part of the investment team at Five V Capital. He is passionate about growing private businesses in an increasingly connected world of technology, people and capital.
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