Wednesday, 04 November 2020 17:21

Don’t Fear Private Equity: Misperceptions Overlook Positive Impact

Written by Mike LeVasseur
Mike LeVasseur is an industry consultant and advocate specializing in mergers and acquisitions Mike LeVasseur is an industry consultant and advocate specializing in mergers and acquisitions


Over the course of my career, I’ve been involved in a lot of different roles, from technician to general manager, to owner and operator of multiple shops, then as a seller when our company was acquired by a large consolidator in 2015, and as a representative and consultant assisting with both sales and acquisitions of collision repair businesses.

As long as I’ve been in this industry, there’s been a common misperception about private equity groups. They’re seen as smug or arrogant---or even as the enemy, focused only on making money at the expense of the companies they acquire.


But it’s often based on a lack of understanding about what private equity is and how it works.


Just like shop owners, private equity groups are business people who are looking to succeed. If you continue to run your business after being acquired or receive backing for growth, the private equity owner is not interested in telling you who to hire or fire or how to operate your facilities. It just wants you to continue to be successful as you were.


Viewing private equity negatively overlooks the positive aspects they bring to the industry and may be able to offer you. They are infusing growth into the business, growth that otherwise would never happen as rapidly or successfully. They find exit strategies for people who may not have otherwise thought about selling. In the process, they are creating millionaires---or multi-millionaires---in our industry.


That’s especially true right now in second- and third-tier markets across the country. Five years ago, shops in those markets were sitting on the sidelines. Now they’re the focus---a big focus---of private equity groups.


“Often, private equity groups are looked at by middle-market business owners with animosity or caution,” Rick Thomas, CEO of FOCUS Investment Bank, told me recently as we discussed this topic. His company assists business owners looking to buy, sell or raise capital in automotive businesses involved in collision repair, paint distribution, tires sales, vehicle service and auto dealerships.

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