The Private Equity Game: Halfway In, Not Halfway Out
For many business owners, selling their company to a private equity (PE) firm is a once-in-a-lifetime event. It’s exciting, validating, and life-changing. Out of the 33 million businesses in the U.S., only about 50,000 sell each year. That’s a fraction of a percent.
So when you’ve built a company, survived the due diligence process, and even taken some chips off the table, it feels like you’ve made it. But here’s the truth: in most PE deals, you’re only halfway in. And you’re definitely not halfway out.
The Illusion of the Big Payday
Let’s say you sell your company for $5 million. On paper, it looks like you’ve hit your retirement number. But the deal structure often tells a different story.
Half of that payout might be rolled back into the new company.
A portion may be tied up in seller notes or earn-outs.
When the dust settles, you may only walk away with $2.5 million upfront (and that’s before taxes.) That’s still significant, but far from the “I’m set for life” expectation many owners have.
And remember: most private equity professionals are finance experts, not operators. Their job is to raise money, deploy it into companies like yours, and exit with a return. That means you’re still in the game, just with new teammates, new rules, and new risks.
When Things Don’t Go as Planned
Maybe you sold at the peak, but markets shift, tariffs, recessions, supply chain disruptions, or unforeseen competition. Suddenly:
Revenue slows.
Debt obligations pile up.
Financial covenants get tripped.
That’s when you’ll hear about capital calls. If you don’t contribute, your ownership dilutes. And new capital gets repaid before your common shares see another dollar.
You thought you were cashing out. Instead, you’re stressed, under pressure, and watching the remaining $2.5 million feel like a distant memory.
That’s what I mean by being halfway in, but not halfway out.
Four Things to Get Right Before Selling
If you’re considering private equity, preparation matters. Here are four non-negotiables:
Build a business that doesn’t need you.
A company that runs without the founder commands higher multiples and attracts better buyers. If you’re the oil in the engine, the business won’t scale, or sell, at a premium.Know your number.
Be crystal clear about the amount you need for financial independence. If you’re close to that number, cashing out completely may be the smarter move. Don’t assume the rollover equity will perform.Be ready to share control.
In most deals, you’re no longer the sole decision-maker. You’ll have investors, board members, and financial expectations dictating the pace. That’s not always easy for an entrepreneur who built the company from scratch and perhaps not the best employee.Decide if you want to stay in the game.
Some owners thrive under PE. Others hate it. If you’re nearing retirement or simply ready for freedom, consider structuring the deal to walk away clean.
The Bigger Picture
At our 40 Strategy Growth Workshop™, we dig deep into these decisions utilizing the 40 Hour Fix:
How to grow value today.
How to scale without the owner.
How to maximize exit value in a tax-efficient way.
How to navigate the world of AI, automation, and talent strategy to make your company run like clockwork.
Selling to private equity can be a great opportunity. But remember, the game doesn’t always end with the deal. For many, it’s just halftime in a game that never seems to end.
40 Strategy Growth Workshop - Location: Phoenix, AZ on Nov 3rd & 4th
New Speaker Announcement - Adi Klevit
Adi Klevit is the Founder of Business Success Consulting Group and the host of the
Systems Simplified podcast. With nearly three decades of experience as an industrial
engineer and process consultant, she’s helped hundreds of growth-focused companies
systematize their operations to scale successfully.
Known as “The Process Guru,” Adi specializes in designing and implementing turnkey
systems that reduce dependence on the owner, empower teams, and increase profitability. Her clients range from fast-growing trades businesses to multi-location professional service firms, and she is a trusted advisor to CEOs across the U.S.
Interested in connecting with experts and high achievers like yourself?
Reply or email kyle.pfeiffer@40accounting.com
