Why 90% of Businesses Don’t Make It Past the Private Equity Origination Desk

What Successful Owners Do Differently to Command a Premium Exit

Closing day is exhilarating. You’ve monetized decades of effort building your company. Your Private Equity (PE) Partner is equally enthusiastic, seeing a runway to create even greater value. This is your wealth event. It is your graduation day, a moment when your bank account is funded with more cash than you ever thought possible. Think of how proud your mother would be of you now!

The hard truth is most businesses won’t pass from Private Equity Origination Teams to their Deal Teams. The Deal Team is the group that pursues your company. I know what you are thinking? “I’ve been receiving three calls a week to buy my business. When I need to sell, there are going to be a million buyers.”

What the PE firm that called is not telling you is that it’s their job to source deals. Your company, along with every other company that comes across the Deal Origination Team’s desk, is put into a model (algorithm) and given a pass or fail. The vast majority of businesses fail to move to the Deal Teams because the company is not a PE “fit.” Ask anyone who has sourced deals. They will tell you, “Deal flow is high, quality is low.”

But why is there a disconnect?

Private Equity Firms have a fiduciary responsibility to their investors (LPs/limited partners) to buy companies they can grow and return a meaningful investment. If your company has too many red flags, it won’t be worth their time and money. In truth, it’s not only PE firms that have this sentiment around risk; Family Offices, strategic investors, and even self-funded searchers pass on risk.

But again you ask, “I still don’t get it. My business runs well. We’ve built a fantastic brand, take care of our customers, and make money.”

The best way to put it, Buyers will pay a premium for businesses they can scale, have sound management practices in place, and have been re-risked. These are easier companies to grow and drive faster returns, which ultimately makes investors happy.

So, what specifically are Private Equity Firms looking for so you can be prepared for a premium exit?

It may seem painful at first, but you need to add key meetings and master running them. You need to think of yourself as a CEO. Private Equity (PE) firms will want a CEO in place; therefore, you should now take on that role. Why are the meetings important? It demonstrates your control over your business, your ability to hold your team accountable, and your focus on growth.

Key Meetings

1. Monthly Operating Review

   • Your PE firm will expect you to run monthly, standardized operating reviews.

   • Create operating reports covering sales and marketing performance, financial results, and key operational metrics.

   • Compare results month-over-month and against prior years, track performance year-to-date, demonstrate progress against budget, and detail performance gaps

   • Discipline, consistency,, and transparency are non-negotiable.

2. Quarterly Board Meeting

   • PE firms expect you to run quarterly board meetings.

   • Included are comprehensive KPIs and strategy updates that highlight both obstacles and growth accelerators.

   • Board-level scrutiny must be intense: you must be prepared to discuss key KPIs, defend your strategy, and answer probing questions from various stakeholders and outside directors.

Additionally, PE Firms Expect Scalable Processes:

Professionalize Teams:

Your business should be able to run without you. Ensure you have an organizational structure, documented processes, and clear accountability. PE firms expect a professional, scalable business—not an owner-dependent operation.

Sales & Marketing Foundations:

Clearly documented sales process with a trackable funnel.

Financial Controls:

Annual & quarterly budgets, forecasts, and actuals with consistent reporting.

Modernize Your Data Strategy:

If you aren't using a data warehouse, begin the transition. Centralizing and structuring your data makes high-quality reporting possible and scalable.

Legal & HR:

Documented processes to ensure there are no liability gaps that leave the business exposed, now or in the future

Next Steps: Getting Expert Help

Bankers and brokers may promise high multiples by polishing your numbers. But to command a true premium exit, your business must stand up to rigorous PE diligence and operate at a higher standard. That’s where Fenwick Partners can help. We partner with business owners to drive the transformation needed pre-exit—enhancing enterprise value and readiness for the next level.

From data infrastructure to management processes, we work alongside you until closing—ensuring that your exit isn’t just lucrative but a true legacy moment.