Is PE right for you?

Selling your business to a private equity (PE) firm is a landmark decision that requires careful consideration and strategic planning. Private equity investments can offer significant financial benefits, but they also come with changes to control, the culture and future direction of your company. Here’s what you need to know to make an informed decision.

1. Financial Objectives 

Assess whether the liquidity event aligns with your personal financial goals. Are you looking to retire, diversify your wealth, or invest in new ventures? Understanding your financial targets can help determine if selling to a PE firm is right for you. As a business owner, you also need to remember PE is a financial investor purely focused on investing for returns over a defined period.

Jonas works on a forever time horizon which allows us to make the best long-term decisions for a company and its stakeholders.

2. Control and Influence 

If you choose to sell a majority stake, be prepared for significant changes in how decisions are made. Many PE firms will want to implement their strategies to maximize returns. Consider whether you are comfortable potentially transitioning from a hands-on executive to an advisory role. If maintaining control is important, explore options like selling a minority stake or establishing clear contractual agreements about your involvement.

Though Jonas is strictly a full-ownership acquirer, one of our key philosophies is providing intelligent autonomy to our acquired businesses. This allows business owners to continue operating post-acquisition with the same level of control but with the backing of Jonas Software’s expertise and financial resources.

3. Strategic Fit

Evaluate the PE firm’s track record with businesses like yours. Do they have success in your industry? Can they provide more than just capital—such as strategic guidance, market access, or operational efficiencies? The right PE partner should help propel your business forward with resources and expertise that align with your company’s needs and aspirations.

At Jonas Software, we are expert operators and acquirers of vertical market software companies of any size across the globe. Our acumen spans hundreds of vertical markets which allows us to develop unique strategies that can strengthen any business in our portfolio.

4. Growth Plans

Understand the PE firm’s plan to grow your business. This could involve entering new markets, accelerating product development, or streamlining operations to increase profitability. Ensure these plans align with your vision for the company’s future and consider how they intend to achieve these growth targets. You must consider how this will affect customers, employees and existing operations.

Jonas prides itself on privileged insights and proprietary knowledge gained from acquiring and operating over 150 vertical market software companies. Learning from our experience, we have developed a proven value-creation playbook that addresses common opportunities and pitfalls faced by vertical market software companies. We continue to use and refine our playbook to drive favourable outcomes in new acquisitions.

5. Exit Strategy

PE firms typically seek to exit their investments within a finite period, aiming to maximize their returns. Discuss their exit strategy—whether it’s a public offering, a sale, or a recapitalization—and understand how it aligns with your interests and expectations for the business’s next phase.

We pride ourselves on our commitment to preserving your legacy with our buy-and-hold forever strategy. Rest assured, if your desire is to see your business continue to thrive and grow, Jonas is the right place for your software company.

6. Employee and Cultural Considerations

The impact on company culture cannot be overstated. A PE firm’s approach should mesh well with your company’s established culture to avoid disruptions that can lead to employee dissatisfaction and turnover. PE investments can lead to restructuring, affecting your employees’ job security and benefits. Evaluate the firm’s philosophy, previous investments, and management style. Meet with key personnel who will interact with your team to ensure compatibility.

Our acquisition philosophy lends itself well to almost any culture developed by vertical market software companies because we work to provide acquired companies with the highest level of autonomy possible.

7. Legal and Regulatory 

The sale process involves meticulous legal attention. From due diligence to compliance with regulatory requirements, every aspect must be managed carefully to avoid future liabilities. Retain experienced legal counsel to navigate this complex process, ensuring that all contractual obligations are clear and fair. 

As an acquirer focused on creating long-term relationships, we work on your schedule to ensure that you receive any guidance or support you may need as we work through this process together.

8. Reputation and Ethics 

Finally, the reputation of the PE firm is critical. Research their business practices, past investments, and treatment of acquired companies. A partner with a questionable ethical track record can harm your legacy and the company’s brand. Choose a firm that values integrity and transparency as much as financial success.

Our reputation speaks for itself. See these acquisition stories where you can hear from owners who were once in the same position as you discuss their experience working with us and eventually joining the Jonas Family.

Matthew Gatter was ready to part ways with his business and found a partner in Jonas that would not only help him transition out of the business but would carry on his legacy.

Here’s an example of how Eric Willin from EZ facility built on his initial passion for managing his business where he now leads multiple brands under Jonas as a portfolio manager.

David was looking for a partner that could help him take his business to the next level. Our expertise was the perfect fit for helping Ineo achieve new growth and success. .

How We Can Help

Selling your vertical market software company is more than just a financial transaction; it’s a pivotal decision that will influence the future of your business, customers, employees, and personal life. By thoroughly evaluating these factors, you can choose a partner that not only offers financial rewards but also supports your growth plan and protects your legacy in the long term. At Jonas Software, we understand the stakes are high, and that’s why we do things differently.

Interested in learning more about Jonas and our buy and hold forever M&A strategy?

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