1. Scale Your Business To New Heights With Private Equity
Published on May 20, 2014 by Christian Wolford
Watching your business grow is a beautiful
thing. In the early stages, growth often
occurs organically and at a manageable
pace. Then the day arrives when you see
new possibilities. After years of slow, steady
growth, you believe there are real
opportunities in the market to scale the
business.
Scaling a company is a complex process.
Business owners should give careful
thought to what they can handle with
current resources and where they need
outside expertise and assistance.
Another consideration is financing. Do you have the capital available to take your
business to new heights?
If you’ve taken the company as far as you can on your own and need industry know‐
how, business expertise and capital, a smart option may be to partner with a private
equity firm. Along with serving as a primary source of financing for your business, a
private equity group may also provide:
1. Borrowing Power. A well‐heeled investor often has the capacity to borrow more
money than you could on your own. Plus, skilled investors know how to best
structure financials. This can help you secure the capital you need (when you need
it) and position your company to take advantage of long‐term financial
opportunities.
2. Operational Know‐How. When you scale a business, the operation can grow in
leaps and bounds and old processes and procedures may not work best. Finding an
investor who understands your business and industry, and who knows how to
enhance business operations, can prepare your business to meet expanded demand.
Many investors have owned or invested in companies similar to yours, so they know
what to expect during the growth process.
3. Efficiency Expertise. The right capital partner can also help improve efficiency
and reduce expenses in your business. You can benefit from the investor’s vast
experience developing other businesses and the proven, sophisticated processes
they have developed over time. Improved efficiencies from equipment, technology,
labor, vendors, logistics and more can contribute significantly to your bottom line.

2. 4. Industry Insight. An investor who has spent years working and connecting in
your industry can be an invaluable resource. They know how the industry works,
stay on top of current trends and may have relationships and partnerships in the
space. This could include trusted suppliers they can leverage to reduce costs or
potential employees who give your company the edge required to scale.
5. Strategic Expertise. A capital partner who has grown companies and has
industry connections may also help facilitate a synergistic or strategic industry
partnership. Bringing the right players together could allow your business to scale
more quickly and grow larger than would be possible on your own.
6. New Channels. Investors who specialize in growing middle‐market businesses
are skilled at developing new distribution channels for products or services when
appropriate. When you create new, viable channels, new customers will follow and
your business grows faster.
Don’t Let Fear Prevent You from Considering Private Equity
Many entrepreneurs resist bringing in a capital partner, because they don’t want to
give up a percentage of ownership in their company. They fear that there will be a
smaller piece of pie left for them once the deal is done. While the percentage owned
may be smaller, with the right investor, this smaller piece of pie will end up coming
from a pie that is much larger than the business owner ever dreamed.
Case in point: Watch the video story of our client CEO Kevin Tupy of Z Wireless.
CEOs who need professional insight on scaling their businesses should turn to a
reputable M&A firm for guidance.
CHRIS WOLFORD is Senior Vice President at Allegiance Capital
Corporation’s Dallas office. He has more than 15 years of financial
services experience as a trusted advisor to middle market businesses
and individuals.
cwolford@allcapcorp.com
Photo Source: © kantver ‐ Fotolia.com
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Keywords: middle‐market businesses; M&A firm; entrepreneurs; CEOs; investment
bankers; private equity