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Private equity: a tempting but risky solution for company succession. Over 60% of all business families face considerable challenges when it comes to succession planning. This is where private equity comes in, promising quick liquidity and growth opportunities. But is this really the best option?
In this article, we look at the advantages and disadvantages of private equity for company succession. Find out why many entrepreneurs opt for this solution, what risks are associated with it and what alternatives are available. Is private equity really the right choice for your company? Find out how to make a strategic decision that ensures long-term success and stability!
Private equity brings capital into unlisted companies in order to increase the value of the company through targeted restructuring and strategic realignment.
The aim: to exit at a profit after a few years. It is often institutional investors who focus on short-term returns and hard financial figures. But what does this mean for family-run companies when it comes to succession planning?
If no internal successor is available, private equity can be an attractive option. But beware: this form of succession entails changes - from the management structure to the corporate culture. An exciting opportunity for many entrepreneurs, a risky bet for others.4o
Unlike private equity, capital flows from entrepreneurial families who themselves have experience in managing family businesses. These investors think in terms of generations, not quarters. Their aim is to promote sustainable growth and stability - values that go far beyond financial figures.
As "strategic partners at eye level", they not only bring capital, but also a deep understanding of entrepreneurial challenges and valuable networks. Family equity is often the better choice for companies looking for long-term partnerships and stable development. The focus here is on preserving the company - not a quick exit.
Companies without a suitable successor can gain fresh capital through private equity and secure the future of their business. In addition to financial support, private equity companies often provide valuable know-how and management experience. But beware: the strong pressure to generate returns can also have its downsides: in order to achieve the expected profits, investors often rely on cost reductions and rapid changes. According to ISB Rheinland-Pfalz, this can lead to higher debts and declining employee satisfaction. A balancing act is crucial: private equity can be a strong partner, but only if the long-term consequences have been clearly thought through.
Family equity enables a sustainable and value-based succession solution. Investors not only contribute capital, but also entrepreneurial experience and promote the long-term development of the company. They are usually more patient and support the management strategically without focusing on short-term returns. The risks lie in the potential blending of family and business interests as well as a potentially lower capital strength compared to private equity firms.
Private equity is aimed at rapid increases in value and transformations. If you want to get your company on course for growth quickly or implement radical changes, you will find the right partner here. Family equity, on the other hand, pursues a long-term vision. These investors focus on stability and the preservation of corporate values, and family equity is often the better choice for family businesses that want to continue their tradition and grow sustainably. The focus here is not on rapid change, but on continuous development - step by step, without losing sight of the big picture.
Private equity and family equity each offer different approaches to company succession. Private equity is characterized by dynamism and rapid growth - ideal for companies looking for change and expansion. Family equity, on the other hand, focuses on stability and long-term development, which is particularly attractive for value-oriented family businesses.
Ultimately, it's the fit that counts: What are the company's long-term goals? Which values should be preserved? A careful analysis and a comparison of the company's goals with the investor strategy are the key to a successful and sustainable succession solution.
FORUM Family Equity offers family businesses individual succession solutions that ensure the long-term success and identity of the company. As a family equity investor, FORUM focuses on sustainability, employee development and cooperation based on trust. In contrast to corporations and private equity funds that aim for quick profits, FORUM builds long-term partnerships and protects the value of the company. Find out how FORUM supports your company in successfully continuing your life's work.
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