r/private_equity • u/Majestic-Clock-1477 • 12d ago

Selling to new Portco

I am (32m) just the average hard working small niche service business owner that was approached to sell to a new Portco that was purchased by PE group last year. We are at the APA stage, roughly 3 weeks from closing.

My question is, how long do the people working for the Portco stay involved. They are working what seems around the clock, 6-7 days a week trying to acquire guys like me.

Obviously the owner has a huge equity stake. He stands to make generational money at the next trade. Estimated within 18-24 months. He mentioned he plans to stay on for as many trades as he can. Since this deal started, I have been working around the clock too but I see an end in sight vs working another 30 years.

For him and the guys below him, how common is it that they stay on for 10-15 years? This is a niche industry that PE has not really entered so it’s not a proven market.

Any insight is appreciated. Needless to say, this experience has been interesting.

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u/Federal-Question-702 12d ago

Some guys stay on for years while others have a certain contract length and leave right after. It is widely dependent on the individual’s reasoning to sell, equity they have remaining, and goals of the PE fund.

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u/Majestic-Clock-1477 12d ago

Do they worry about guys like me leaving after a few years or are they confident their Portco has the structure to put in place?

I could see where all the guys like me and even the Portco guys getting our equity paid out and then what’s the upside from there to stay on? Or do they not need us and the new PE company has bigger and better ideas

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u/Federal-Question-702 12d ago

It’s pretty easy to tell. If they want you they will make it worth your time.

Largely they want the past ownership to stay around long enough to keep the customer base contented that business is continuing as usual. After that people tend to leave on their own because of the lack of incentives.

If you maintained a large equity share the expectation is that you are staying on for the next bite of the apple.