The unprecedented increase in capital in the private equity sector is forcing private equity firms to differentiate themselves to remain competitive. Private markets are at historical highs with a staggering $2.6 trillion allocated to private equity groups in the last ten years, according to Pitchbook. As median deal size and EBITDA multiples continue to climb, owners of private businesses are looking for more than just a large multiple to sell. The lower middle market is filled with passionate executives that have either founded their companies or are leading businesses that have been in their family for generations.

As median deal size and EBITDA multiples continue to climb, owners of private businesses are looking for more than just a large multiple to sell. The lower middle market is filled with passionate executives that have either founded their companies or are leading businesses that have been in their family for generations. PE firms must adapt to this hyper-competitive market where owners are receiving several offers from a wide range of interested buyers.

PE firms can distinguish themselves through an executive-led buy-and-build strategy. An experienced industry executive will attract prospects that otherwise may not have considered answering the phone. Today, more than ever, owners are aware of the surplus and diversity of their options due to the growing number of potential buyers with adequate capital eager to purchase their businesses.

Sellers still require a valuation deserving of their business, but with several options available, they will place substantial weight on overall fit, potential synergies, and – most importantly – continued care of their employees and culture post-transaction. Many of these owners have personally built customer relationships and strong reputations that they would like to see continued long after they’ve exited the business.

By partnering with accomplished executives, private equity firms are more likely to win deals in a competitive market and quickly gain the attention of relevant add-on acquisition targets.

Please contact us to learn more about how we can help you work with executives on acquisition searches.