Compare
Fellwater vs. private equity.
The fair version of both. A fund is the right buyer for some owners; here's how to tell.
What's the same.
Both pay real money for real earnings, both will diligence you carefully, and both can write an LOI with a note, an earn-out or a rollover in it when the deal calls for one.
What's different.
A private equity fund
- Buys with money that has a deadline: the fund returns capital to its investors, usually in about six years.
- Often attaches your business to a platform; decisions move there after close.
- Rollover, earn-outs and escrow are common; ask what sits ahead of your equity and how it could dilute.
- Debt goes on the company at close, sized to the fund's return.
- Can pay well when you fit the platform's plan.
- Sells again, usually in five or six years.
Fellwater
- Buys to own, with no date to sell by.
- The business stays the business: its name, its people, its decisions.
- A written offer early, with the funding spelled out and anything conditional called conditional.
- Debt sized to what the business can carry, not to a return target.
- Your role your choice: stay, ease out, or leave.
- One decision-maker, start to finish.
Where the fund is the right answer: a business that needs a platform's scale now, or an owner who wants the highest gross number and is comfortable with the structure that comes with it. Ask both buyers what has to be true for every conditional dollar to pay.