Practice Sales06.24

Why PE Might Not Be The Perfect Match

In the fast-paced world of business growth, private equity (PE) firms have become a ubiquitous presence. They offer attractive funding and promise a quick exit strategy, but what if there's a better option for your company? Many businesses, particularly those with strong management teams, are discovering the advantages of partnering with established, manager-owned businesses (MOBs).

Updated: 13th June 2024

While PE firms can provide significant capital, their investment strategy often prioritises short-term gains over long-term value creation. Here's why PE might not be the ideal partner for every company:

  • Focus on Short-Term Profits: PE firms typically have a set investment horizon and prioritise maximising returns within a limited timeframe. This can lead to pressure on costs, staff cuts, and a potential decline in service quality.
  • Loss of Control and Identity: PE ownership often involves ceding significant control to external investors, potentially leading to a disconnect between management and the company's core values.
  • Cultural Misalignment: The high-pressure, results-oriented culture of PE firms can clash with the established culture of many businesses, leading to employee dissatisfaction and decreased productivity.

Enter the Manager-Owned Advantage: A Partnership for Growth
MOBs offer a unique alternative to PE investment. These established businesses, often led by experienced management teams, understand the challenges and opportunities faced by growing companies. Here's why partnering with an MOB could be the key to unlocking your next stage of growth:

  • Shared Vision and Values: MOBs often share a similar entrepreneurial spirit and long-term perspective with owner-managed businesses. This fosters a collaborative environment built on shared goals and values.
  • Industry Expertise: Many MOBs operate within the same industry as their potential partners. This deep understanding of the market landscape can be invaluable for navigating growth strategies and identifying new opportunities.
  • Operational Support: MOBs can offer valuable operational support, leveraging their existing expertise in areas like marketing, finance, and human resources.
  • Preserving Company Culture: Partnering with an MOB allows you to maintain control over your company's culture and decision-making processes.

A Look at the Numbers: The Rise of MOB Investment
The MOB approach is gaining traction in the UK business landscape. A 2023 report by the National Institute of Economic and Social Research (NIESR) found that manager-owned businesses are responsible for creating nearly a third of all new jobs in the UK [Source: NIESR]. This trend highlights the growing recognition of the value proposition offered by MOB partnerships.

Finding the Perfect MOB Partner: A Strategic Approach
If you're considering partnering with an MOB, here are some key steps:

  • Clearly Define Your Growth Goals: Be clear about your long-term aspirations and what you hope to achieve through a partnership.
  • Identify Potential MOBs: Research established businesses in your industry that share your values and possess complementary skillsets.
  • Initiate Conversations: Reach out to potential MOB partners and initiate open and transparent discussions about your vision for a mutually beneficial partnership.

Building a Sustainable Future: The Power of Collaboration
The decision to partner for growth requires careful consideration. While PE firms offer a quick injection of capital, MOB partnerships offer a more collaborative and strategically aligned approach. With shared goals, industry expertise, and a commitment to long-term success, MOB partnerships can empower companies to achieve sustainable growth while preserving their unique culture and identity.

Beyond This Article: Unveiling the Manager-Owned Network
This article provides a foundational understanding of the benefits of partnering with MOBs. For those seeking to explore this opportunity further, we offer access to a curated network of established, manager-owned businesses actively seeking partnerships with ambitious companies like yours.

Contact us today to learn more about how a manager-owned partnership can unlock your full growth potential.

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