The Advisor’s Corner

Private equity groups/firms (PEGs) have provided an outstanding exit option for owners of privately owned businesses who want to sell their company. Based on what I’ve experienced and learned from others, when it’s the right situation, PEGs are willing to pay the founder/owners a very fair price, and often allow the owner to continue with minority ownership so they can participate in a second sale. PEG owners are smart, experienced, connected, and often bring resources — financial and otherwise — to the company. They provide a financially disciplined approach with annual budgets/plans, and regular monitoring of the actual results.

You can’t argue that that’s all good stuff. For some reason, though, I’ve had reservations about PEG ownership. Simon Sinek, in his latest book about “Infinite Companies,” helped me understand my concern. Most of his comments/observations/examples would be related to publicly owned companies, but I believe his theories could also apply to some PEGs.

In a nutshell, his definition of an “Infinite Company” is one that bases its decisions on the long term, versus a “Finite Company” that’s short-term-focused. He shares stories about how both Infinite and Finite companies behave.

If you’re a founder with what Sinek would call a “just cause” and desire to leave a legacy, I would highly recommend reading The Infinite Game. 

If your company has gone public or it’s been sold to a PEG and you’re no longer comfortable with it, I would highly recommend you read Sinek’s book.