Blitzer, Clancy & Company

Equity Partnership / Investment

Protecting Wealth and Supporting Growth

Entrepreneurs and entrepreneurial teams that have built successful companies are often concerned about what happens next:

  • Big growth opportunities may be available (both organic and through acquisition)
  • Significant personal wealth may be tied into the existing business
  • An exit by the owner-executives may be desired within 2-7 years
  • Taking additional personal risks or putting existing shareholder value at risk to take advantage of identified growth opportunities may not make sense
  • Owner-executives may not be ready to sell to a large strategic buyer and walk away

A traditional approach of raising a small amount of capital for a minority share is an alternative but may not address key owner-executive concerns:

  • Minority investments most often prevent the owner-executives from taking any liquidity out of the Company at time of investment
  • Future capital investments more likely to require the owner-executives to co-invest, to avoid significant dilution

A long-term private investor can be the right solution for these situations, providing both immediate and long-term value for owner-executives:

Immediate Value:

  • Cash to existing shareholders for a majority ownership in the Company
  • Establishment of equity incentives for key executives, as well as for key employees who may not have existing ownership interests

Long-term Value:

  • Access to less-risky (non-personal) capital to enable significant organic growth investments and acquisitions
  • Building a Company of greater value and significance
  • Owner-executives retain minority ownership and have the opportunity to participate in a second, potentially more significant exit due to increased EBITDA and higher selling multiples as a larger Company
  • The personal value of the second exit for owner-executives is often much higher than the first payout

Blitzer, Clancy & Company can help owner-executives in analyzing this option to best position their Company for maximum value and a positive reception from potential equity partners and lead this process to find the right partners and complete a successful transaction.

BCC has established relationships with equity investors around the globe and expands this network on a continuous basis. Every equity investor is different, even when it may not be initially apparent. Each has its own objectives and values, investment focus and timelines, geographic market preferences and operating styles.

Being fully prepared with the right positioning, strategy and growth story before meeting with potential equity investors is critical. BCC leads the effort to prepare the Company and handles all of the initial contacts and discussions with potential investors to enable owner-executives and their management teams to continue focusing on running their companies. BCC acts as an extension to management and is able to engage in in-depth discussions with potential equity partners about the business. This minimizes Company disruption and results in a quicker overall process.

Equity Partnership/Investment — Key Points