Exit Opportunities: Financial Buyer Types and Attributes

Ephor Newsletter Q1 2026

January 2026

Happy New Year!

 In our 4th Quarter 2025 Ephor Newsletter, which we distributed in mid-December 2025, Ephor outlined the Fundamentals of Business Exit Planning and Wealth Transfer for Founders & CEO Entrepreneurs. (Q4 2025 Newsletter). 

As a follow-up, in this January 2025 Monthly Edition of Ephor’s Newsletter, we provide you, the Founder & CEO Entrepreneur, a high-level educational overview on the Types of Buyers of Your Business and the Attributes of those Buyers.

Over Ephor’s 25 years of service in this sector, in general, we know that most Founders & CEO Entrepreneurs “only know something” about Private Equity (“PE”) or have had their peers/friends sell their assets to Private Equity.

 

The “reality” is that there is a myriad of Buyers. Therefore, it is most prudent and life-changing that you be effective in choosing the “Buyer Type” that best fits your situation and your specific “Exit” objectives.

  • Transaction outcome data over the past 10+ years emphatically proves that you can maximize both the short-term and near-term Enterprise Value (“EV”) of the business assets, if you simply execute on a process to align your situation to “the best next fit owner” of the assets and the right leadership to maximize the human capital skill and the culture of the organization.

In addition to PE, additional Financial Buyer types include Mezzanine Funds, Alternative Asset Funds, and Family Wealth Offices.  Each of these Buyer types has its own set of targets & attributes to consider:

 

PE Funds:

  • 3-5 Year Investment “Hold” Cycle

  • Fund “Liquidity Life” 5–12-year maximum fund lifecycle

  •  Change of Control: Majority Investments are the norm (rare are minority investments)

    • Therefore, a Mandatory need for Fast & Timely Exits determined by fund dynamics not the Business - Aggressive growth mandates & immediate efficiency outcomes

  • Deploy multiple levers simultaneously

  • Based on Due Diligence deficiencies 70% of the time “Re-Trade” occurs

  • Significant Governance required; very invasive on operations

  • Priority Return from Fund Investors; Preferred Equity

 Mezzanine Funds:

  • 3-5 Year both Equity and Debt Financing Combinations

  • Liquidity Is determined by the Company Situation; Not Fund requirements

  • Best for “Interim or Bridge” Financing Situations

  • Minority Investments Prevail

  • Exits are Situational and Can Be Market Timed

  • Minimal Governance Required: Often No Formal BOD

  • Non-Invasive on Operations

  • Equity efficient: Owners/Founders Keep “Valuable Equity”

Alternative Asset Funds:

  • Longer Term Investment Hold Cycles: 6-12 years

  • Tranche Investing: original investment plus available “pool of capital”

  • Best for Longer Term “Planned Platform Consolidations” Exits

  • Majority Investments Prevail, more favorable terms than PE

  • Formal Governance Required, Executive Chairman Role

  • Return Expectations are less than PE: due to “Allocation Process” by Fund Managers

  • Stringent Due Diligence: Less Re-trading than PE

  • Very Attractive “Earn Out” Structures for Management and Founders/Owners

  • Minimally Invasive Operations

 

Family Wealth Offices

  • No fund timeline: VERY PATIENT & SUPPORTIVE CAPITAL (“patient capital”)

    • Normally, “hold businesses” for 7-10 year or more timeframes

  • Majority of Investments are the norm: minority investments are often situational

  • Less invasive on operations and patient on process and productivity improvements

  • Will retain “skilled professionals” govern and increase asset values

  • Often Founders stay heavily involved for extended periods of time and are “appreciated”.

  • Less likely to re-trade & generally “better deal terms”: statistically 10-15% uplift in EV

  • Limited external return or exit pressures

Therefore, before one competently acts upon an exit initiative, each Founder/CEO Entrepreneur must define their own specific situational attributes and outcomes desired to be able to select the category (or categories) of Buyer Types to target and customize your exit initiative documentation and process.

 

Failure to do the above proper & necessary “alignment work” almost always results in wasted time and effort and, most importantly, decreased or suppressed Enterprise Value (EV) outcomes.

 

Before we close this educational newsletter, in our next February Monthly Newsletter, we will provide an overview of your “Exit Options” (Founder Liquidity Options), including outlining the material differences between selling a Majority Interest of your company ("A Majority Recap" or change of ownership control transaction) and selling a Minority Interest ("A Minority Recap").

 

To reiterate, “Exiting Planning or Wealth Transfer Initiatives” of your business assets often is the most important financial and lifestyle decision of your lifetime.

Therefore, at Ephor, we strongly suggest that you “get an unbiased and knowledgeable expertise and perspectives on your specific situation” to ensure that you “maximize the value of your efforts and do what is “best” for “all the stakeholders”. 

In closing, as always, we would love to hear from you and/or receive your input on how we might better serve your entrepreneurial needs.

Please feel free to contact us below.

 

Regards and Again HAPPY NEW YEAR!

 

Garry E. Meier

Strategic Practice Lead

Ephor Group Inc.

Contact Us