Private Equity Companies: A Quiet Financial Buyer in the Business Marketplace

In 1989, a man named Henry Kravis made a deal that would change the face of business forever.

He and his firm, Kohlberg Kravis Roberts, acquired RJR Nabisco for a staggering $25 billion — the largest leveraged buyout the world had ever seen at the time. It wasn’t just the size of the deal that shocked the public. It was the idea that someone who didn’t make cigarettes or bake cookies could take over a corporate empire simply because they had access to capital — and knew how to use it.

That moment revealed something profound: in the marketplace for businesses, not all buyers are created equal.

Some are driven by emotion. Others by family legacy. And some — like Kravis — by numbers, strategy, and the art of financial engineering.

These are financial buyers. AKA Private Equity Companies

And understanding them is one of the most overlooked — yet critical — elements in a successful business exit.

The Anatomy of a Financial Buyer

Let’s begin here: imagine you own a successful manufacturing company. You've built it over thirty years, turned a tidy profit, and you’re ready to hand over the reins. Who's the right person to take it from here?

Your nephew, perhaps? A competitor? A loyal employee?

Or maybe someone you've never met — someone who doesn't care about your product, your brand, or your legacy. Someone who cares only about your margins, your EBITDA, your growth trajectory.

This is the paradox of the financial buyer. They are simultaneously impersonal and intensely interested. Not in you, but in what you’ve built.

They walk into the negotiation table not with sentiment, but with spreadsheets.

But that’s not a bad thing.

The Psychology of Return

To understand financial buyers, we need to think like them.

They are investors — private equity firms, search funds, family offices. Their allegiance isn’t to the story of the founder, but to the future of the business. And not just any future: one with a quantifiable return on investment.

A strategic buyer asks, “How does this fit into my company?”

A financial buyer asks, “What can this business become if capital and management align?”

In many ways, financial buyers operate more like scientists than salespeople. They observe. They measure. They look for variables they can optimize.

A bloated payroll? Trimmable. An outdated website? Fixable. Recurring revenue with room to scale? Priceless.

They don’t fall in love with the business. They fall in love with the spreadsheet.

A Real-World Example: Chess, Capital, and Patience

Back when I was working in my corporate role at one of the large RIAs, I had the opportunity to work with a fascinating client — a group of partners who owned a chess manufacturing company.

Yes, chess.

They produced high-end boards, pieces, and custom sets that were shipped around the world. It was a niche business, but a surprisingly lucrative one — especially during the pandemic boom when people rediscovered board games and analog pastimes.

At their peak, the company was generating strong cash flow and attractive margins. And like many business owners nearing retirement, the partners began exploring an exit. Eventually, a small private equity firm came knocking with a promising offer. The firm wanted to buy them out and scale the brand through ecommerce and global distribution. It seemed like a great fit — a classic financial buyer play.

But then came the recession.

Interest rates began to climb. The cost of capital increased. The PE firm that had once shown such excitement grew cautious. They started revisiting terms, slowing communication, shifting focus. The founders — especially the client I worked with — became uneasy.

He called one day, frustrated but composed.

“What if we just keep shopping it?” he asked.“If these guys are feeling the heat, others probably are too. But maybe someone else is still hungry.”

He wasn’t wrong.

What followed was a grueling three-year journey. They met with multiple buyers — some strategic, some financial, some who vanished after initial diligence. The market was tough, and the uncertainty in interest rates spooked more than a few prospects. But the team stayed disciplined. They worked on their balance sheet. They built out more recurring contracts. They stayed profitable.

Finally, after more than three years, a mid-sized private equity firm stepped in — not with a lowball rescue offer, but with a strategic growth plan and fair market valuation. The deal got done.

And here’s the kicker: it ended up being a better deal than the first.

Why?

Because by the time they closed, the business was more resilient. It had stronger books, clearer contracts, and better infrastructure. What looked like a delay turned out to be a positioning advantage. They had been tested — and they passed.

That’s the thing about financial buyers. They come and go with market conditions, but when the fundamentals are right and the story is clear, someone always sees the value.

Let me know if you’d like this story pulled into a standalone case study, or if you'd like to continue the series with a follow-up on How to Attract the Right Buyer.

What Financial Buyers Want

There’s a phrase that comes up again and again when talking with these buyers: predictability.

They’re not looking for perfection. They’re looking for predictability of cash flow, systems that scale, and owners who know when to step back.

Here’s the short list:

• Strong EBITDA: Ideally over $500k annually, adjusted for non-recurring expenses.

• Clean financials: Not just tax returns, but normalized financial statements.

• Recurring revenue: The golden goose.

• Management depth: A team that can run without the founder.

• Low customer concentration: No single client accounting for 50%+ of revenue.

  
  

Think of it this way: financial buyers want to buy a car that doesn’t break down when you take your hands off the wheel.

The Hidden Trade-Off

But let’s not romanticize this.

Financial buyers are not in the business of feelings. They’re not going to preserve your company culture out of loyalty. They may cut staff, change the brand, or move headquarters if it improves profitability.

They are, after all, playing a different game. One where risk is managed by math, not memory.

And that can be jarring for founders whose identities are tied to the business. Which raises an essential question: What are you really selling — a company or a legacy?

Sometimes the two can co-exist. Sometimes they can’t.

The Second Bite

One of the fascinating concepts in the financial buyer world is the second bite at the apple.

Many founders who sell to financial buyers retain a minority stake — 10%, 20%, even 30%. Then, when the buyer sells the business again (often 3–7 years later), the founder gets a second payday.

And in many cases, it’s bigger than the first.

This delayed gratification model rewards founders who are willing to share control and ride the next wave of growth. But it also demands trust — in your buyer, in the vision, in the future.

It’s not for everyone. But for those who can think like investors, it can be transformative.

The Long Game

If there’s one lesson from all of this, it’s that understanding your buyer isn’t just about closing a deal — it’s about designing your exit around the right kind of partner.

The best exits don’t happen at the negotiating table. They happen years earlier, when the owner starts thinking like a buyer.

When they ask:

• What would I look for if I were investing in my own business?

• What systems would I want in place?

• What risks would I want mitigated?

  
  

The moment a founder starts asking those questions, they’ve already stepped into the mind of a financial buyer.

And that’s the beginning of a very different kind of ending.

Want to know if your business is ready for a financial buyer?

Let’s talk. Because the best exits aren’t about what you sell — they’re about what you keep.

About The Author

Marc Lowe is the Founder & President of In The Money Retirement Planning. He is a Certified Financial Planner and member of NAPFA National Association of Personal Financial Advisors, XY Planning Network & Fee-Only Network. He works with retirees and those approaching retirement. He has over a decade of experience helping these folks grow their net worth, organize their finances and build better lives for themselves and their families.

CEO & Founder of In The Money Retirement Planning

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