Private Equity: Partner or Predator?

Let’s not sugar-coat this, most business owners flirting with the idea of selling to private equity are chasing a fantasy.

It’s a seductive narrative: a team of slick investors drops in with deep pockets, throws cash at your feet, and promises exponential growth. But when it comes to retirement exits where long-term legacy and peace of mind matter as much as the deal value, private equity (PE) may not be the shining knight it’s often made out to be.

Let’s set the record straight on what proper private equity is, when it can work, and why, in most cases, a strategic trade buyer will beat PE hands down.

What Do We Actually Mean by Private Equity?

When we say “private equity,” we’re not talking about John from LinkedIn who wants to “partner” with you on your exit in exchange for some vague future upside. We’re not talking about a search fund operator on their second deal. And we’re definitely not talking about that angel investor who “loves your niche” but has zero sector experience.

We’re talking about professionally managed private equity firms, the kind that raise hundreds of millions (or billions) from institutional investors, pension funds, and endowments, and then deploy that capital with a clear mandate: deliver a return, fast.

Think of names like Inflexion, LDC, or Livingbridge in the UK. These are serious players with defined investment theses, tight hold periods (usually 3–5 years), and very specific return expectations.

Now ask yourself: does your business fit that mould?

Most SME Businesses Are Simply Not a Fit for Private Equity

Private equity is interested in two types of businesses:

1. Fast-growing, scalable ventures that need significant capital to hit the next stage.

2. Established, profitable companies that can serve as platforms or bolt-ons in a buy-and-build strategy.

If you don’t fall into one of those buckets, you’re not a PE target, no matter how great your EBITDA or how well you’ve grown your turnover over the years.

And here’s the kicker: even if you do fit one of those models, the PE firm’s interests are not always aligned with yours as a retiring shareholder.

Let’s explore that.

When Private Equity Can Work (But Still Demands Caution)

If you’re running a high-growth business that needs significant funding to continue scaling, maybe to enter new markets, develop IP, or build infrastructure then private equity might be your best or only viable route. Especially if you’re not ready to sell outright but want to de-risk and take some money off the table.

But beware: you’re not exiting. You’re doubling down.

In these cases, PE will likely want you to stay on, roll over equity, hit ambitious targets, and keep sweating for 3–5 more years until their exit. You may get a second bite of the cherry... or you may end up holding worthless equity if things go south. And they often do.

• Where will you sit in the capital stack if there’s a problem?

• Who gets paid first if the next deal collapses?

• What happens if you don’t hit year two targets?

These are not hypotheticals. They’re the uncomfortable truths behind the polished pitch decks.

What About Established Businesses? You Might Be a Platform or a Bolt-On

If your business is well-established, with recurring revenue, solid profits, and a credible management team, you may be of interest to PE as a platform acquisition. This means your business becomes the base upon which other smaller bolt-on acquisitions are layered in a particular sector.

Alternatively, you may be considered a bolt-on yourself, added to an existing portfolio company to deepen capability, customer reach, or market share.

But again, think carefully.

Private equity will typically want you to stay involved, at least for a handover. They’ll bring in new leadership, change culture, and drive for aggressive growth, fast. Legacy, employee wellbeing, and customer continuity are lower down the list than hitting KPIs and preparing for their own exit.

So before you get flattered by the pitch or dazzled by the numbers on the offer sheet, ask:

Is this the right buyer for your retirement exit?

Why Trade Buyers Usually Offer a Better Outcome

Here’s the truth many won’t tell you: If private equity is seriously interested in your business, then so are trade buyers—and they’re usually better aligned with your retirement goals.

A strategic acquirer, typically a complementary business in your sector brings something different to the table:

• Sector understanding and synergy

• Longer-term vision (5–10+ years, not just a 3-year flip)

• Respect for your legacy

• Better cultural fit and operational integration

• Often a stronger financial deal overall

Yes, they want to make money, there not a charity. But the motivation is usually more strategic than financial engineering. They’re building something, not just flipping a balance sheet.

And let’s be blunt: in 9 out of 10 retirement sales we handle, a good trade buyer will put forward a more attractive, more sustainable, and ultimately more respectful deal than private equity ever will.

The Bottom Line: Don’t Confuse Interest with Best Fit

Getting courted by private equity can feel like a validation of everything you’ve built and sometimes, it is. But remember, not all exits are created equal, and not all investors are good for your business, your people, or your peace of mind.

If you’re planning to retire in the next few years, your priorities should be:

• Getting a fair price

• Minimising risk

• Protecting your team and brand

• Ensuring continuity

• Preserving your legacy

Private equity may check the first box. A good trade acquirer will tick all five.

Thinking About Retirement? Know Your Options

At VEXUS.co.uk, we specialise in retirement business sales, helping business owners explore all available options, from trade sales to private equity, MBOs, EOTs, and partial exits.

We’ll tell you what others won’t, and don't want you to hear.

Whether you’re looking to exit in the next year or just starting to plan, we’re happy to have a confidential, no-obligation conversation.

Contact VEXUS