Private Equity Buyers Seeking Founder-Owned Companies

And Hungrier Than Ever

Companies without any institutional (VC, PE) ownership are often referred to as “non-backed” in the M&A marketplace, particularly for PE Buyers. These types of companies are typically led by their founders or inherited through family generational planning. Based on our research, this Founder-owned company type has played a significant role in PE deal activity, most recently accounting for more than 52% of the middle-market PE buyouts in 2023. Importantly, that share of the M&A market has risen from 47.5% in 2021 and is expected to climb higher over the next few years.

The recent increase in M&A transactions involving “non-backed” companies indicates a rebound from the 2011-2020 cycle in which larger scale and sponsor-backed transactions were more in favor. With this rebound comes a wider market caution; amid current macroeconomic conditions, many sellers, including financial sponsors and potential PE platform investments, are deferring deals as they await a more favorable interest rate climate. Non-backed sellers, often constrained by higher financing costs or demographic factors such as Founder retirement issues, may find themselves less able to postpone or select the optimal exit strategy timing.

At Greenwich Capital Group (GCG) we have made a career over the past 10 years focusing on and specializing in helping founder-led companies optimize their liquidity strategy. At GCG we understand the nuances of family relationships, appreciate the fragile histories of our clients, and value the transition of the Founders’ “legacy” to the right steward, not just the highest-paying entity. Unlike their “backed” counterparts, which might wait for better market conditions, non-backed companies are often pushed towards selling. Push rationales might include a) immediate competitive or financial pressures, or b) personal circumstances (divorce, health, business partner separation). These human issues highlight a distinct dynamic in the lower half of the middle market M&A transaction landscape. We hope Founder-led companies will give us the chance to advise you on this unique milestone transition and liquidity transaction.

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