Private Equity Groups
Private Equity Groups are investment companies that exist to buy businesses. They focus on privately held businesses. Often PEG's will buy a company, hold onto it while they grow it (partly by acquisition) for several years, and then resell it or take it public.
Some people use the term "private equity group" and "venture capital group" interchangeably. While VCs and PEG's are related, there are significant differences between them. Venture capitalists often invest in startups and in early stage companies. Private equity groups tend to look for more established companies and generally prefer to buy entire companies or at least a controlling interest in those companies. There is overlap and there certainly are companies that operate as both VCs and PEGs.
Not all private equity groups are created equal
Any group (or even an individual) can call themselves a private equity group. Some are literally comprised of one person with a few business cards and a website. Others have thousands of employees and own businesses that can be worth billions of dollars in aggregate.
Buying Businesses with Cash vs. Hope
Some underfunded PEGs make deals to buy businesses in the hope of later getting investor or bank financing. If they can't get that financing, they cancel the deal.
Real private equity groups have committed investors and bank lines of credit. They can easily acquire small and medium size companies without having to make elaborate investor presentations and without undue difficulty.
Of course we screen the PEGs we deal with carefully to make sure that we are dealing with companies that have the resources to consummate any deal we make for our sellers.
We have been dealing with private equity groups for years and know where to bring 2 to 15 million dollar PEG deals. Often PEG deals in this size range take the form of add-on acquisitions (acquiring companies in an industry where they already have a presence).
If you're selling a business there are many advantages to dealing with PEGs, not the least of which is they are well funded experienced buyers, not tire kickers.
If you are considering the sale of your company now or in the near future, give us a call. We'll be happy to discuss this possibility with you without cost or obligation.
