Today’s M&A Digest features discussion about private equity overhang and why it’s important, how to value a business, and how to plan an exit strategy.
Private Equity Overhang and the Hurdles PE Firms Face
“Several times during the past few months we have seen estimates regarding the size of the private equity overhang. This refers to the amount of capital committed by investors to equity firms for investing purposes. When private equity funds are created, most have limited lifetimes. That means that fund managers typically have 5-7 years to invest the private equity overhang, or they have to send the capital back to their investors. Since they really don’t like doing this, the size and the vintage age of the private equity overhang really does matter.
Recently Pitchbook, a leading research company that tracks equity and venture capital fund activity, updated their estimate of the private equity overhang.”
“Business valuations are one of the toughest challenges business owners face. Since the majority of owners only own one business in their professional lives, many don’t have the experience or expertise needed to arrive at an accurate valuation. And since most of your net worth is tied up in one asset, having an accurate idea of its worth is critical.
Here are the three big-picture steps to give you an idea of how to value a business.”
What An Exit Strategy Is And How To Plan One
“Crafting an exit strategy is one of those things that many private business owners know they need to do but rarely get around to doing.
In fact, according to a study conducted by Whitehorse Advisors, “Ninety-six percent of baby boomer business owners agree that having an exit strategy is important, but 87 percent do not have a written, current exit plan.”
Today we review what an exit strategy is, why it’s important, and how to plan one.”
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Learn what you need to know about preparing your exit plan. Download a complimentary whitepaper from M&A advisory firm Generational Equity called Exit Planning Basics: What You Need To Know Before You Start.
