When a private equity firm comes knocking, the opportunity can be exciting, but the wrong partner can fundamentally change the future of your business. Beyond valuation, business owners should carefully evaluate whether a potential partner aligns with their long-term goals, operational philosophy, and company culture. Before moving forward, there are several key questions and factors to consider.

These questions are designed to help owners look beyond the headline number and assess whether a private equity partner will strengthen, or strain, the business over time.

1. What are the buyer’s long-term goals for the business?

Understanding a private equity firm’s investment thesis is critical. Is the firm planning to grow the company organically, pursue acquisitions, consolidate operations, or prepare for a resale within a defined time horizon? It’s common for private equity firms to operate on a structured investment cycle, often targeting an exit within five to seven years, although depending on the firm’s capital sources, they may have flexibility for longer or indefinite hold periods.

Owners should consider whether the firm’s growth expectations, exit strategy, and capital timeline align with their own vision for the company’s future. Further, understanding whether the company will be a platform acquisition or will roll up into an existing investment can significantly impact the level of change post-transaction.

2. How will the firm add value beyond capital?

Business owners should evaluate how a private equity firm intends to support the business operationally. This may include:

• Strategic planning and growth initiatives
• Access to industry relationships or new markets
• Operational efficiency improvements
• Technology and automation investments
• Strengthening financial reporting and controls
  

Understanding the firm’s operational resources and industry expertise can help determine whether the partnership will drive measurable improvement or simply financial oversight.

3. Do they have experience in your industry?

Experience matters, particularly in operationally complex businesses. Owners should review the firm’s history with similar companies, including:

• Past and current investments in the sector
• Outcomes of those investments
• Challenges encountered and how they were addressed
• Management structure post-transaction
  

Often, there is an opportunity to connect with former portfolio company owners, providing valuable insight into their experience and what working with the firm will actually look like.

4. How will the deal structure affect financial health?

Transaction structure can have a long-term impact on the company’s balance sheet and flexibility. Questions to evaluate include:

• How much debt will the business take on as part of the transaction?
• How will cash flow be impacted by the level of debt assumed?
• Are there earn-outs or performance-based incentives?
• What capital expenditures will be required in the future?
  

While leverage can amplify investor returns, it can also limit flexibility during economic downturns or periods of market volatility. Owners should carefully model how the structure impacts liquidity, reinvestment capacity, and working capital needs.

5. What level of operational involvement should you expect?

Private equity firms vary in their management style. Some take an active operational role, while others focus primarily on governance and financial performance. Clarifying expectations early on can prevent misalignment later. Owners should understand:

• Reporting requirements
• Board composition and decision-making authority
• Approval processes for capital expenditures or strategic initiatives
• Expectations for management continuity
  
  

6. How will the partnership impact employees and culture?

A transaction does not just affect ownership; it impacts people. Many businesses have long-tenured employees and deeply rooted cultures. Owners should assess how a private equity partnership may influence:

• Leadership roles and succession plans
• Workforce stability
• Compensation and incentive structures
• Company culture and communication
• Customer and vendor relationships
  

Clear communication and thoughtful transition planning can help minimize disruption and maintain morale.

Prepare for Your Private Equity Transaction with Lutz

A private equity transaction is a complex financial and operational decision. Our transaction advisory services help business owners evaluate deal structures and assess financial impact. Contact us to learn more.

• Futuristic, Achiever, Relator, Analytical, Belief

Aimee Werner

M&A Director

Aimee Werner, M&A Director at Lutz, began her career in 2014. Since joining the firm as an intern, she has steadily advanced through progressive roles to her current leadership position, developing extensive expertise in mergers and acquisitions along the way. 

Providing comprehensive transaction advisory services to businesses and individuals, Aimee guides clients through the complex process of buying or selling a business. Her areas of focus include due diligence, quality of earnings assessments, working capital consulting, adjusted EBITDA and purchase price evaluations, and sell-side consulting. Aimee values the opportunity to learn about different businesses and industries while building trust and rapport with clients throughout the transaction process. 

 

At Lutz, Aimee's analytical mindset and achievement-oriented approach enable her to deliver thorough, actionable insights during critical transitions. Her ability to build strong relationships with clients while maintaining meticulous attention to financial details has made her a trusted advisor during what is often one of the most significant transactions in a business owner's career. 

 

Werner lives in Gretna, NE, with her husband, Adam, and two kids, Nolan and Noelle. Outside the office, Aimee can be found traveling, attending concerts, trying new restaurants, and spending time with family, friends, and her two dogs Murphy and Cooper. 

402.827.2314

awerner@lutz.us

Connect on LinkedIn

• Woo, Communication, Positivity, Restorative, Futuristic

Katie Smith

Senior Financial Analyst

Katie Smith, Senior Financial Analyst, began her career in 2020. She has developed comprehensive expertise in mergers and acquisitions, providing transaction support and market insights.

Supporting both buy-side and sell-side transactions, Katie conducts detailed financial analyses and market research across various industries. She creates compelling marketing materials and assists with due diligence processes while managing communications between parties. Katie values presenting clients' businesses effectively while maintaining strong relationships throughout complex transactions.

Katie lives in Omaha, NE. Outside the office, she can be found traveling, trying new restaurants, cheering on the Huskers, and spending time with friends and family.

402.827.2071

ksmith@lutz.us