Because of the apparent success of the private equity company behind the continuing expansion of Sweeping Corporation of America — which now boasts being in 40+ markets — larger sweeping contractors have reported numerous contacts from SCA and other private equity (PE) firms. If you receive a call from one and want to find out more, be sure to protect your business’ interests.
Before providing a PE or anyone else with confidential information about your company, make sure to have a non-disclosure agreement in place. Also find out if the PE already owns any other sweeping companies. If so, see what you can find out about those previous purchases.
Perhaps the most important factor for the PE will be confirming there is an excellent management team in place, since they often will not be involved in day-to-day operations after purchase.
Essentially, PE purchasers view your business from a mathematical perspective. They are all about increasing your growth after sale, so to increase your value to them show how your company is positioned for that possibility. In order to maximize the multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) you end up receiving, show in as mathematical a manner as possible why your company is a good purchase prospect.
PE firms tend to purchase companies that require little initial additional investment. They are also calculating their potential exit strategies as they negotiate any sale. The advantages of selling to a PE firm can be many, including obtaining additional capitalization needed for growth. However, before you open your books to a PE firm or anyone else interested in buying your company, it’s vitally important that you do some research about the best protocol to follow.
World Sweeping Association contributor Ranger Kidwell-Ross has been providing information to the power sweeping industry since 1988. He is editor of WorldSweeper.com, an information source for power sweeping, as well as founder and executive director of the World Sweeping Association.