What happens when private equity buys your competitor?
1–10 of 42 posts
Re: What happens when private equity buys your competitor?
#2It's definitely true to an extent that when the founders doesn't have any control or motivation, the outcome tend to be subpar. Also, the post highlights the obvious difference between PE and VC that PE mostly looks for min guarantee return and companies which are predictable to get them returns through either a sellout or IPO. What i wonder though is, why would founders in general go for this buyout(apart from the obvious reasons like money). Is there any reason companies are sold to PE investors in general?
Re: What happens when private equity buys your competitor?
#3It's definitely true to an extent that when the founders doesn't have any control or motivation, the outcome tend to be subpar. Also, the post highlights the obvious difference between PE and VC that PE mostly looks for min guarantee return and companies which are predictable to get them returns through either a sellout or IPO. What i wonder though is, why would founders in general go for this buyout(apart from the o…
One could certainly interpret a PE buyout as an "exit".
Re: What happens when private equity buys your competitor?
#4It's definitely true to an extent that when the founders doesn't have any control or motivation, the outcome tend to be subpar. Also, the post highlights the obvious difference between PE and VC that PE mostly looks for min guarantee return and companies which are predictable to get them returns through either a sellout or IPO. What i wonder though is, why would founders in general go for this buyout(apart from the o…
Sometimes the most obvious reasons are obvious because they're the reasons. PE companies are quite happy to buy founders out and let them sit back or earn out. As another user has pointed out, that's essentially an exit. It's much more attractive to many founders than the VC offering them at best a 50/50 chance of cashing out in future once liquidation preferences are factored in and demanding much more performance, probably over a longer period, to get to that stage.
Also, there are plenty of companies which are attractive to PE companies (profitable, steady growth which could be a bit faster) but not attractive to VCs (market is pretty well defined and never going to be huge) so the PE investors are the only ones approaching them.
Re: What happens when private equity buys your competitor?
#5It's definitely true to an extent that when the founders doesn't have any control or motivation, the outcome tend to be subpar. Also, the post highlights the obvious difference between PE and VC that PE mostly looks for min guarantee return and companies which are predictable to get them returns through either a sellout or IPO. What i wonder though is, why would founders in general go for this buyout(apart from the o…
One could certainly interpret a PE buyout as an "exit".
This was true with my employer. The first PE transaction was the owners/founders cashing out. The company was about 40 years old at the time (and the founders, while on the board, were no longer part of the executive team), so not quite the same as a start-up doing a PE deal.
Re: What happens when private equity buys your competitor?
#6> Founders are special people who somehow glimpse a vision of the future that few others understand, and then go build it.
Ughh, more founder-worship. What's more believable is that lots and lots of people can see glimpses of the future all around them. Out of that larger set, the ones that are lucky enough to have access to the capital and connections needed to start up and run a company are the ones that end up as "founders".
Re: What happens when private equity buys your competitor?
#7> Founders are special people who somehow glimpse a vision of the future that few others understand, and then go build it. Ughh, more founder-worship. What's more believable is that lots and lots of people can see glimpses of the future all around them. Out of that larger set, the ones that are lucky enough to have access to the capital and connections needed to start up and run a company are the ones that end up as…
Well, that's on a VC blog so it's a sales pitch do get people to pitch them. All businesses will tell you "we love you".
Of course the entrepreneurs (founders or not) are not the customers, the LPs are.
Re: What happens when private equity buys your competitor?
#8So relevant info - I used to work at a Vista Equity owned company, one that was eventually sold to Oracle. Vista was run by a bunch of MBAs that believed that had the best insight on how a to run a software company, including what technology to use.
We were evaluating better tools for version control as we had been using Subversion. We were seriously considering Git, Jira, and Github. Then Vista decided they knew what was best for all of their companies and decided it was Microsoft Team Foundation and Foundation Server. :/
I know Vista has had a lot of success but it certainly is not related to their ability to make technical decisions for the companies they own. They are succeeding in spite of this kind of decision making, not because of it.
Re: What happens when private equity buys your competitor?
#9So relevant info - I used to work at a Vista Equity owned company, one that was eventually sold to Oracle. Vista was run by a bunch of MBAs that believed that had the best insight on how a to run a software company, including what technology to use. We were evaluating better tools for version control as we had been using Subversion. We were seriously considering Git, Jira, and Github. Then Vista decided they knew wha…
Wow. That’s pretty crazy.
Re: What happens when private equity buys your competitor?
#10So relevant info - I used to work at a Vista Equity owned company, one that was eventually sold to Oracle. Vista was run by a bunch of MBAs that believed that had the best insight on how a to run a software company, including what technology to use. We were evaluating better tools for version control as we had been using Subversion. We were seriously considering Git, Jira, and Github. Then Vista decided they knew wha…
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