"When is it Time to Sell Your Company to a Private Equity Firm, and How do You go about doing it?" - 01/30/19 Edition
Stephen Says Column

 Dear Stephen:
 
 I own a medium-sized manufacturing company and several of my friends who own medium-to-small manufacturing companies ($50 million seems to be the sweet spot) have sold all or portions of their companies to private equity investors. Clarus, Robert Allen/Du- ralee, Carnegie Fabrics, Thibaut and many more must have heard a compelling story from a smart, young whippersnapper in PE to motivate them to sell.
 
 Some companies are manufacturers, others assemble parts and pieces made in Asia or Germany and call themselves manufacturers, others are textile converters or some primarily design and marketing companies that use outside mills to make the products.
 
 Here is the question: How do I bring my company to the attention of the PE investors? How do I make it happen, and is it worth it? I guess they want to build these brands further with their cash, then flip them, and the profit comes from the eventual sale of my company. Do I get cash or equity, and what about my employees? Help me understand this new phenomenon and why it seems to be so prevalent in our industry.
 
 Make Me An Offer I Can’t Refuse!
 
 Dear Waiting For An Offer:
 
 More and more private equity money is pouring into the interiors industry at all levels: residential, contract, even dealers. I remember in 2017 there were at least 12 deals, ranging from $1.45 billion to $50 million, and there is still lots of PE activity, even though there’s some skittishness in the economy. If you make or sell great products and have a strong brand name, you are a potential company to be purchased.
 PE activities should not be confused with the major manufacturers who have been acquiring smaller competitors for years — what we’re talking about here are cash rich outsiders looking to make a profit. The major manufacturers gobble up companies to increase market share and make it look like they are growing — the private equity firms are buying for the shorter term, pumping growth and then hoping to sell at a multiple of the original purchase price.
 
 “Whippersnappers?” Really? How old are you? Maybe it is time to sell! I will agree that most of the PE executives I have met who are making these buying decisions are quite young,
 in their 30s, and usually from an Ivy League school (Harvard is very popular). The ladies and gentlemen are smart and determined to explore our industry. They seem tired of Silicon Valley investments, where many of them made their money, and want to move into tangible products and creative brands. It seems to be a mix of residential brands, contract, trade and retail, manufacturing, dealers and even some related real estate deals.
 
 As the PE people analyze your business, it’s not so much about the shiny objects you sell as it is your EBITDA (earnings before interest, taxes, depreciation and amortization) your accountant computes for you. Combine that financial info with your marketing story into a slick PowerPoint and see if they are interested.
 
 It is not just the EBITDA alone that represents the value of your company. It is also the goodwill your brand has developed. To maximize that goodwill number it may take a third party consultant to advise you. So, be sure you
 are getting the best advice beyond the PE company interested.
 
 Sound intrigued about selling your company? I will be happy to give you the names of preferred consultants, confidentially via email. And come join me this spring in NYC for The Viscusi Group first “I May Want to Sell My Business” forum exclusively for the interiors industry. My team is putting together an exciting, broad-ranging day with a handful of leading industry specific experts based on my customers’ requests for more guidance to explore this avenue. I am not a lawyer or a CPA, and I do not consult on M&As. I am a recruiter. However, we recruit for owners and CEOs and over the years have dealt on every level between the outside PE companies to the owners. Last year more than 40 percent of The Viscusi Group clients were PE firms that own the furniture and ancillary industry companies we recruit for. Details about the forum will be posted on our website www. viscusigroup.com.
 
 Stephen
 
 
You can send your workplace questions to Stephen at: StephenSays@bellow.press
 
 Questions selected to be answered, will appear in this column. Please use the Subject: Stephen Says for all emails. Stephen Viscusi is a bestselling author, television personality, and CEO of The Viscusi Group, global executive recruiters located in New York. Follow Stephen on Twitter @stephenviscusi. Like Stephen on Facebook; and follow him on LinkedIn.