| " Private equity firms have come under fire for pursuing big, mostly public companies in the hopes of striking it rich quick. But overlooked amid all the criticism are signs that they've also been helping to support a pillar of the U.S. economy: family-owned businesses." " More closely-held family companies are turning to private equity for financing as the private equity market has exploded, experts said." ""The market is awash in private equity money. Private equity is very aggressive in looking for good companies and good growth opportunities," said Fentress Seagroves, a partner with PricewaterhouseCoopers' Private Company Services." "Private equity funds, which raised $200 billion worldwide from wealthy individuals and institutional investors last year alone, are hungry to invest in established businesses with strong fundamentals and growth potential - criteria that many family-owned firms meet, according to small business consultants." "For families, private equity funds can deliver the cash they need to grow their business. They can also provide liquidity for family-owned firms managing a generational change." "Overall numbers on the size and terms of private equity deals in mom-and-pop operations are hard to come by. Generally, investments tend to be on a smaller scale, ranging from a couple of million dollars to a few hundred million dollars. According to Dealogic, the number of private equity deals valued at $100 million or less rose to 571, up 11 percent from 2005." ""Private equity is a terrific opportunity because it offers families internal and external expansion," said Eugene O'Malley, managing partner of Cobblestone Advisers, an investment banking firm that focuses on family-owned companies." "What's more, private equity firms are often flexible about financing terms with family firms. Depending on the family's objectives, they might purchase a majority or minority stake instead of buying the business outright, he said." "Private equity firms tend to target more established family firms with at least $50 million in annual revenue, experts said. These firms may be small, but together they make up a significant portion of the U.S. economy." "Family-owned businesses contribute anywhere from 30 to 60 percent of gross domestic product (depending on how a family firm is defined), according to a 2003 study published in Family Business Review. Gross domestic product is a broad measure of the nation's economic
... read the whole article |