Private Equity Firm Wants to Buy My Business, What Should I Do?

May 08, 2025 |

Commercial Litigation, Corporate Transactions

private equity deal

When private equity firms express interest in purchasing your business, it can be both an exciting and daunting experience. On one hand, it serves as a validation of your hard work and a testament to the success of your business. On the other hand, it presents an onslaught of questions and unknowns, most of which you likely have never considered before. To that end, the decision of whether to sell your business requires careful thought and consideration.

To help ease your concerns when it comes to private equity deals, Plakas Mannos is here to negotiate on your behalf, draft and review the contracts at play, and ensure that your future is secure. While this blog aims to pinpoint basic considerations during a private equity buyout, it is strongly recommended that you obtain legal counsel to help guide you through the process, as every sale is unique.

What is Private Equity?

Before detailing the various considerations at play, it is important to understand what a private equity firm is. Private equity firms typically invest in small to medium size businesses, with the overall goal being to improve operations, reduce costs, and increase profitability, often through restructuring, active management, or strategic investments. Once the value of the company has increased, private equity firms typically resell the business at a profit.

what is private equity

What Steps Should I Take When a Private Equity Firm Expresses Interest in Purchasing My Business?

As business sale lawyers, there are several key steps we suggest to consider when a private equity firm expresses interest in purchasing your business:

1. Evaluate Your Goals

Before engaging with a private equity firm, it is important to consider both your personal and financial goals.

From the personal side, you should determine what you want for your future. Are you at a point in your life where you would like to step away from your business and retire? Alternatively, are you interested in working with a partner to upscale and grow your company? Private equity buyouts can work both ways, with some firms looking to purchase the company outright and others providing you with an opportunity to continue to manage the company and/or stay on in a leadership capacity.

Relatedly, if your company is multi-generational and/or historically family-run your goals may include finding a private equity firm that aligns with your values, such that they will continue to treat employees fairly, embrace the company culture established, and provide an environment where your remaining family members can still work harmoniously for the business.

On the financial side, you will want to determine a purchase price range that would provide you with the financial freedom you desire now, while also including terms that provide you with financial security in the long run.

2. Evaluate Your Business Readiness and Conduct a Business Valuation

Private equity firms aim to purchase businesses with established revenue streams that they believe can grow and generate significant returns. Thus, it is important that your business maintains clean and well-organized financials. Having a strong management team in place is also key. Overall, you want to make sure that your company is positioned for growth such that you obtain maximum value for your business upon any sale.

With that in mind, it is also important to obtain a business valuation in order to understand the true value of your company. This step can be crucial in the negotiation process. While a potential private equity buyer will likely offer their own valuation, having an independent valuation conducted helps to avoid a situation where you sell your business at below fair market value, taking into consideration current economic conditions and future potential for growth. A proper business evaluator will provide a valuation that takes into consideration recent sales of similar businesses while estimating both the current assets and future profits of your individual business.

3. Review the Terms and Structure of the Offer

While the sale price is certainly a key factor to consider, there are numerous other considerations at play, including:

Structure of the purchase price: Will the purchase price be made in one lump-sum payment? Will it be paid out over time? If the purchase price is paid out over time, is there any interest that is accrued? Are there any additional payments that may be made based on future performance?

Equity retention: Are you making a full sale of the company and walking away with the proceeds? Are you retaining a portion of the equity in the company or a minority stake? Are there any earnout provisions such that the sale price may be tied to future performance of the company?

Level of Control: Are you staying involved with the company in any respects? Will you retain control or a role in decision-making? Are you expected to continue in your current capacity with the company?

Additional agreements: Does the sale require you to execute a non-compete agreement? Does the offer include any confidentiality provisions?

Employee impact: Will the sale trigger any restructuring or layoffs that you are uncomfortable with? Is there a plan moving forward regarding employee benefits or retention packages? Is there an exit plan in place?

4. Seek Professional Advice

In any buyout, but particularly in one involving a private equity firm, it is essential to seek both legal and financial advisors to understand the various implications of the acquisition. From a financial perspective, it may be necessary to engage a tax professional or accountant to ensure that the deal is structured in such a manner that you avoid any unnecessary tax consequences and that you are properly advised on what tax implications will be triggered.

From a legal perspective, it is important to have an attorney engaged throughout the duration of the acquisition. In a buyout, private equity attorneys provide several important functions, including:

Negotiating both the price and the relevant terms of the deal;

Drafting the necessary paperwork to accurately reflect the parameters of the deal and effectively transferring the business interest at stake;

Ensuring compliance with all legal requirements involved in the sale of a business;

Employing protections that will shield you from any liability once the private equity firm takes either full or partial control;

Reviewing and revising any non-compete agreements or post-sale agreements that may be at issue;

Connecting you with applicable financial professionals and business evaluators; and

Assisting with due diligence and acting as a central hub to ensure that everyone has accurate information concerning the deal.

5. Create a Post-Sale Plan

In a lot of cases, signing the deal is only the beginning. Individuals who sell their company are often left with a large sum of money and one pertinent question, “What’s next?”

Before you make your next important career or life decision, the most important advice we can give to someone faced with such a question is to ensure that your affairs are in order and that your money is being properly managed to maximize your return. Depending upon the needs of a particular individual, at a minimum, you will want to establish a basic estate plan that includes items such as a Will, Financial Power of Attorney, Healthcare Power of Attorney, Living Will, and Transfer on Death Affidavit. However, in most instances, the sale of a business often will leave you with a substantial amount of money, in addition to your existing assets. For those reasons, it is almost always more beneficial to establish a Trust. The benefits of a Trust are several, including:

Avoiding probate upon your death;

Providing you with privacy over your estate plans;

In the case of a revocable trust, providing you with flexibility and control of your assets during your lifetime;

In the case of an irrevocable trust, reducing or eliminating estate and gift tax;

Providing you with the ability to designate who will manage your assets should you become incapacitated, without the need for a conservatorship or guardianship;

Planning for the care and management of minor children; and

Designating the manner of distribution and beneficiaries of your estate.

In short, make sure you have your estate plan in order following the sale of your company!

What Steps Should I Take When a Private Equity Firm Expresses Interest in Purchasing My Business

Allow Plakas Mannos to Assist in the Sale of Your Business

Whether you are considering selling your business to a private equity firm, individual buyer, or any entity in between, the business and estate/wealth planning attorneys at Plakas Mannos are here to assist you in everything from negotiation to document drafting to creating a post-sale estate plan. Give our team a call today at 330-455-6112 to see how we can help you.