Private Equity Story Time: Grandchildren and Trusts

Here is another short story in my new installment: Private Equity Story Time. These stories are designed to pass along the lessons I learned from some of the best PE practitioners in the world and how they can be applied to your deal.

I was representing a private equity client acquiring a manufacturing business and noticed the business was owned by two trusts.

On a diligence call, I asked about the ownership. The seller, now 85 years old said, the money from the sale is going to my two granddaughters.

He said I started my business from nothing 40 years ago. Me and my wife took loans and grew slowly because we had no money. After a while, we scratched out a good living. This business put my girls through college and paid for community Little League sponsorships.

I wanted to teach my granddaughters to run a business, but it seems when they get old enough I won't be around. I'm leaving the cash to them so they can comfortably start their own business and achieve the freedom it took me so long to build. I will be happy knowing I made their path smoother than mine.

Those words hit me hard because I have always wanted the path for my three kids to be smoother and easier than I had it. Maybe I give them too much, maybe I splurge a bit more than I should on them, but I never want them to feel the scarcity that I felt.

Some late nights when I need to dig deep, I think about the impact I will have on my grandchildren by being able to pay for their schooling or give them the downpayment money to buy their starter home. It keeps me going knowing they will have it easier than I had it.

Each business my clients acquire is more than just a deal, it represents years of dedication and selflessness to provide a better life for their families and make generational change.

The Buyers that understand this are the ones to which Sellers trust with their legacy.

Each business is more than just an asset and more than financial projections. It needs to be viewed as the vehicle that put kids through college and paid off a mortgage. Oftentimes, this was the sum total of someone’s life.

The buyers who treat the business with this level of reverence and respect will be trusted by a seller.