Being Contacted by PE

searcher profile

November 04, 2024

by a searcher from Texas A&M University in Cedar Park, TX, USA

I've had several PE firms reach out to me about acquiring my business. I'm not near big enough yet to even have that conversation. Is this normal and just what they do to drag their bait through the water?!

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Reply by a searcher
from Arizona State University in Phoenix, AZ, USA
Luke thanks for the tag.

Geoffrey - PE reaching out can be a variety of things. These are the classic ones that come to mind.

1. They cast wide nets apart of their biz dev efforts, and based on what sticks the following would happen

- They realize your business is not a fit for them based on industry, size, etc
- They realize your business is a great fit and hope you will consider selling it

- They realize your business is too small but want you to keep them in mind for future when you grow

- You might believe your business is too small for them, but it depends on the PE firm. For us, we focus on the businesses that are too small for private equity, <$3mm of EBITDA, but for most PE firms they will go small because of “add-ons” which is when they buy smaller competitors or complimentary companies and merge them with a bigger company they already own.

Hope that is helpful
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Reply by a professional
from Cornell University in Toronto, ON, Canada
Very general sizing for a PE firm is $5m EBITDA for a platform (or $5m ARR). Add-ons can be any size, but are often viewed as >$1mm EBITDA. It's hard for an acquirer to know exactly how large your firm is unless something is published, so a PE firm with a platform in the space or an interest to get into the space may blanket outreach to all companies in their selected geography to try and learn more/start a relationship. I'd recommend taking a call to see how it goes and have the experience, understanding what they may ask of you, info they would require, etc.


Keep a record of who reached out to you for your own buyer list when the time to exit!
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