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Exit Strategy with Caleb Schmidt of Duco Capital
In This Episode
I sat down with Caleb Schmidt, a partner at Duco Capital, to discuss the role of private equity in business acquisitions and why it matters to business owners today.
https://youtu.be/7g0u1-Ls9FU
Why This Conversation MattersAs more business owners consider selling, understanding private equity's role becomes essential. This episode aims to clarify what private equity is and how it operates, providing practical insights for business owners contemplating an exit strategy.
Episode HighlightsUnderstanding Private Equity: We start by breaking down the basics of private equity, explaining what it is and the different types of private equity buyers. Caleb details the distinctions between funded and unfunded models and their implications for business owners.
Leadership Transitions: Caleb shares how Duco Capital focuses on leadership transitions, targeting lower middle-market manufacturing companies. We discuss the importance of having a strong network of CEOs and leaders ready to step in, ensuring business continuity during the transition period.
Due Diligence and Deal Structuring: The due diligence process is critical. Caleb explains what business owners can expect, from initial financial assessments to the various stages of due diligence. We also cover how deals are structured, including cash considerations, seller's notes, and earn-outs, and why specialized M&A attorneys are crucial.
Valuation Factors: Caleb outlines the key factors that drive business valuation, such as recurring revenue, strong leadership, and operational efficiencies. We discuss how industry-specific knowledge and comparable transactions influence multiples.
Post-Acquisition Life: Transitioning out of a business can be challenging. Caleb talks about what life looks like after a sale, particularly when a new CEO is brought in. He explains how Duco Capital ensures smooth transitions, aligning the interests of all stakeholders for long-term success.
Key Takeaways for Business Owners-
Do Your Homework on Private Equity Buyers: Not all private equity groups are the same. Business owners need to understand the different types of private equity and conduct thorough due diligence on potential buyers.
-
Prepare for Leadership Transition: If considering retirement or stepping back, having a solid plan for leadership transition is essential. Partnering with a firm experienced in this process can make a significant difference.
-
The Importance of Specialized Legal Advice: Engaging an M&A attorney who specializes in business sales can ensure a smooth transaction and help navigate the legal complexities.
-
Focus on Value Drivers: Understanding what drives value in your business can help maximize its sale price. Key factors include recurring revenue, operational efficiencies, and strong leadership.
-
Aligning Interests Post-Acquisition: Ensuring that all parties' interests are aligned post-acquisition is crucial for success. This includes having the right leadership and deal structures that incentivize long-term goals.
This episode provides valuable insights for business owners considering an exit strategy. Caleb's practical advice and deep understanding of private equity offer clear guidance. Whether you are just starting your exit planning or refining your strategy, this conversation is packed with useful information.
Enjoy the episode and be sure to follow Caleb Schmidt and Duco Capital for more updates and insights.
If you're a business owner looking to understand how selling your business to private equity can impact your personal financial plan — Schedule a Free Discovery Call.
Our expertise in wealth management and financial planning is tailored to help you navigate the complexities before, during, and after a sale. Reach out to us to start the conversation and ensure your financial future is secure.
Disclaimer: The information on this site is provided "AS IS" and without warranties, either express or implied. To the fullest extent permissible according to applicable laws, SBI Financial Services, LLC (referred to as "E-Wealth Partners") disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose. E-Wealth Partners does not warrant that the information will be free from error. None of the information provided is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon for transacting securities or other investments. Under no circumstances shall E-Wealth Partners be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the materials provided. In no event shall SBI Financial Services have any liability to you for damages, losses, and causes of action for accessing this commentary. Past performance is not indicative of future results.
View all episodes
By Brian AdamekIn This Episode
I sat down with Caleb Schmidt, a partner at Duco Capital, to discuss the role of private equity in business acquisitions and why it matters to business owners today.
https://youtu.be/7g0u1-Ls9FU
Why This Conversation MattersAs more business owners consider selling, understanding private equity's role becomes essential. This episode aims to clarify what private equity is and how it operates, providing practical insights for business owners contemplating an exit strategy.
Episode HighlightsUnderstanding Private Equity: We start by breaking down the basics of private equity, explaining what it is and the different types of private equity buyers. Caleb details the distinctions between funded and unfunded models and their implications for business owners.
Leadership Transitions: Caleb shares how Duco Capital focuses on leadership transitions, targeting lower middle-market manufacturing companies. We discuss the importance of having a strong network of CEOs and leaders ready to step in, ensuring business continuity during the transition period.
Due Diligence and Deal Structuring: The due diligence process is critical. Caleb explains what business owners can expect, from initial financial assessments to the various stages of due diligence. We also cover how deals are structured, including cash considerations, seller's notes, and earn-outs, and why specialized M&A attorneys are crucial.
Valuation Factors: Caleb outlines the key factors that drive business valuation, such as recurring revenue, strong leadership, and operational efficiencies. We discuss how industry-specific knowledge and comparable transactions influence multiples.
Post-Acquisition Life: Transitioning out of a business can be challenging. Caleb talks about what life looks like after a sale, particularly when a new CEO is brought in. He explains how Duco Capital ensures smooth transitions, aligning the interests of all stakeholders for long-term success.
Key Takeaways for Business Owners-
Do Your Homework on Private Equity Buyers: Not all private equity groups are the same. Business owners need to understand the different types of private equity and conduct thorough due diligence on potential buyers.
-
Prepare for Leadership Transition: If considering retirement or stepping back, having a solid plan for leadership transition is essential. Partnering with a firm experienced in this process can make a significant difference.
-
The Importance of Specialized Legal Advice: Engaging an M&A attorney who specializes in business sales can ensure a smooth transaction and help navigate the legal complexities.
-
Focus on Value Drivers: Understanding what drives value in your business can help maximize its sale price. Key factors include recurring revenue, operational efficiencies, and strong leadership.
-
Aligning Interests Post-Acquisition: Ensuring that all parties' interests are aligned post-acquisition is crucial for success. This includes having the right leadership and deal structures that incentivize long-term goals.
This episode provides valuable insights for business owners considering an exit strategy. Caleb's practical advice and deep understanding of private equity offer clear guidance. Whether you are just starting your exit planning or refining your strategy, this conversation is packed with useful information.
Enjoy the episode and be sure to follow Caleb Schmidt and Duco Capital for more updates and insights.
If you're a business owner looking to understand how selling your business to private equity can impact your personal financial plan — Schedule a Free Discovery Call.
Our expertise in wealth management and financial planning is tailored to help you navigate the complexities before, during, and after a sale. Reach out to us to start the conversation and ensure your financial future is secure.
Disclaimer: The information on this site is provided "AS IS" and without warranties, either express or implied. To the fullest extent permissible according to applicable laws, SBI Financial Services, LLC (referred to as "E-Wealth Partners") disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose. E-Wealth Partners does not warrant that the information will be free from error. None of the information provided is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon for transacting securities or other investments. Under no circumstances shall E-Wealth Partners be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the materials provided. In no event shall SBI Financial Services have any liability to you for damages, losses, and causes of action for accessing this commentary. Past performance is not indicative of future results.