How to Maximize Value Before a Private Equity Event: Why Wait When You Can Start Now?
When business owners think about private equity (PE), they often see it as a transformative force that brings new leadership, implements structure, and drives growth. But here’s the real question: Why wait for PE to do all this when you can get a head start on these improvements today?
With PE firms expecting annual returns of 25-30% (or even higher for niche funds), they have no choice but to move fast and execute aggressively once they acquire a company. However, you don’t have to wait for a PE firm to show up to whip your business into shape. By proactively implementing the right strategies and systems now, you can significantly increase your business’s value before any sale or investment event—and avoid selling at a discount just to gain access to those same improvements.
Here’s how you can create that value yourself, long before private equity even steps in the door.
1. Hire a Seasoned Coach or Advisor to Guide Operational Improvements
While PE firms will bring in experts to overhaul operations and leadership, you can achieve the same results—if not better—by working with a hands-on business advisor. Unlike junior associates at a PE firm who may be smart but lack real-world experience, a seasoned advisor has “been there, done that.”
An advisor can help you:
- Set a clear vision and align your leadership team.
- Document processes and implement best practices that increase efficiency and scalability.
- Build a culture of accountability by defining roles, KPIs, and performance metrics.
This level of guidance not only improves your business operations but also prepares your company to hit the ground running, whether you decide to sell or scale further.
2. Focus on People and Culture—Before It’s Mandated
PE firms are notorious for replacing CEOs and executives if they aren’t driving results. But instead of waiting for an outsider to force changes, you can get proactive about optimizing your team now.
- Hire A-players who align with your core values and build a strong culture that retains top talent.
- Invest in coaching and development to turn good employees into great ones, while letting go of underperformers.
- Clarify roles and accountability so that your team is aligned, motivated, and driving toward your strategic goals.
When you do this, you won’t just be handing over a well-oiled machine to a potential buyer—you’ll also enjoy a more efficient, profitable business in the meantime.
3. Create a Repeatable Playbook for Success
One of the first things PE firms do is document workflows, refine processes, and streamline operations. But again, why wait? By establishing a structured playbook now, you can unlock efficiencies and create repeatable processes that drive growth without burning out your team.
- Systematize your operations to ensure consistency and scalability.
- Implement structured sales processes and enhance pricing strategies to focus on high-margin customers.
- Optimize cost structures to generate sustainable savings and higher profitability.
Having these playbooks in place not only makes your business more attractive to buyers but also gives you more control over your growth trajectory.
4. Focus on Sustainability, Not Just Growth at All Costs
PE firms will often push for aggressive growth to maximize returns, but they can sometimes do so at the expense of long-term sustainability. By focusing on sustainable growth now, you can drive both top-line and bottom-line improvements that stick.
- Prioritize sustainable growth strategies that don’t sacrifice efficiency for speed.
- Use data and KPIs to monitor progress and ensure you’re scaling responsibly.
- Lean into operational resilience to weather market changes and uncertainties.
By taking a sustainable approach, you can protect your business from the boom-and-bust cycles that sometimes follow rapid growth driven by PE mandates.
5. Embrace a Company Rhythm and Cadence
PE firms are known for implementing rigorous meeting cadences and holding leadership accountable. By establishing a strong rhythm now, you can maintain alignment, prioritize key initiatives, and foster a culture of continuous improvement.
- Define 1-2-3-5 year goals to keep everyone focused on the long-term vision.
- Break down goals into quarterly rocks to ensure progress is measurable and actionable.
- Establish a meeting cadence (daily stand-ups, weekly check-ins, and monthly reviews) to stay aligned and address issues before they become crises.
This level of operational discipline drives execution, reduces chaos, and prepares your company for a smooth transition if you decide to sell.
6. Consider How AI Can Transform Your Business—Now, Not Later
AI isn’t just a buzzword; it’s a tool that can help streamline operations, reduce costs, and drive efficiencies. Instead of waiting for a PE firm to implement AI solutions, start integrating them now.
- Leverage AI to automate repetitive tasks, improve customer support, and optimize your supply chain.
- Use AI-powered data analytics to gain insights into customer behavior, marketing effectiveness, and operational efficiency.
- Explore AI solutions that can cut costs and enhance productivity, making your business more profitable and competitive.
Early adoption of AI can not only increase your business value but also future-proof your operations against disruptions.
The Bottom Line: DIY Private Equity with the Right Systems and Guidance
The reality is, you don’t need to wait for a PE firm to take control of your business to implement the systems and strategies that drive value. By investing in the right operational improvements, aligning your team, and leveraging experienced advisory support, you can unlock the same value-creation strategies that PE firms use—without having to sell at a discount.
Empower your team, execute relentlessly, and build a sustainable moat around your business. This approach doesn’t just prepare you for a future exit—it sets your company up for long-term, profitable growth. So, whether you’re considering a sale in the next few years or simply looking to drive sustainable profitability, start now. The sooner you take action, the greater the impact on your bottom line and overall enterprise value.
By doing this, you’ll be in control—not waiting for a new boss to dictate what you should have been doing all along. And when the time comes to consider an acquisition or investment, you’ll be in a far stronger position to negotiate on your terms.
