Business owners face a myriad of issues when building their businesses. These issues range from developing a product or service, to attracting customers, selecting suppliers, arranging financings, retaining employees and fending off competition, to name just a few. A business owner is bombarded on a daily basis with challenges like these, requiring decisions that will fundamentally affect the business. Since the business is generally the owner's principal asset, these daily issues can be all-consuming.
The owner's goal is to build a company that can either be passed on to his or her heirs or sold to liquefy assets. As you know, growing a business is difficult and cannot be achieved alone. Yes, you may be the leader, but you need a team; lawyers and accountants are integral members of that team, as are your lenders. Still, in many cases, this team can take you only so far with the execution of your strategy. The introduction of additional capital, whether in the form of debt, equity or a combination of the two, can provide the fuel to help propel your business forward.
Importantly, private equity firms provide more than capital. The additional value that a private equity firm can bring includes management and HR expertise, lending relationships and buying co-ops, as well as board insight and financial discipline that can be transformational. On the other hand, unless well-planned, the introduction of a private equity firm can also be intrusive. The preparation for taking on this type of partner in your business can be overwhelming, distracting and often bewildering. Fortunately, with an experienced team and preparation, you can reduce (although not eliminate) the frustration and anxiety—and increase your return.
Preparation for working with a private equity firm is not limited to the business. Although a business owner may have a long-term business strategy and may be executing a tactical strategy that includes funding of some description from a private equity firm, in many cases, he or she does not have a personal financial plan. This is a missed opportunity: The planning for the private equity process should always include a wealth planning component. In fact, it is essential to take a holistic approach to the entire wealth creation process.
The Duane Morris Owner's Manual provides a road map for business owners as they prepare to navigate the sea of change that will accompany the private equity and wealth planning process. As this area is highly technical and can be quite complex, we have provided a glossary of some of the terms used throughout this publication. We hope that our Owner's Manual will provide some initial guidance as you plan the next phase of growth for your company.
This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.
Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.
