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What Happens After You Sell to Private Equity?

What Happens After You Sell to Private Equity?

Wise Words from Jim Schleckser

Simplify Wall Street
March 30, 2025 • Estimated Reading Time: 5 minutes

MEET TODAY’S GUEST

Jim Schleckser from the Inc CEO Project

Schleckser works with CEOs of high-growth companies through his firm, the CEO Project, and is the author of the book Great CEOs Are Lazy.

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THE INTERVIEW

Wise Words from Jim Schleckser

In a recent video, Jim lays out a reality check for founders thinking about cashing out.

Here are six big things to expect once private equity takes control of your business — and what traders and entrepreneurs alike can learn from the shift in ownership.

1. They’ll Want to Keep You (At First)

You might be dreaming of sipping fruity drinks in Aruba the day after the deal closes — but not so fast.
Private equity firms usually want the former owner to stick around, at least temporarily, to transition the business and transfer critical knowledge. You're not done yet.

2. Then, They’ll Probably Fire You

Jim doesn’t sugarcoat it:

“In almost every case… within one year, the CEO is fired.”

Why? Because there's usually a strategic disagreement about how the business should be run. Either you won't want to implement their playbook — or they'll want someone who will. If you don’t walk out, they’ll show you the door.

3. They’ll Load Your Business with Debt

Private equity thrives on leverage.
If you’ve built your business debt-free, get ready for a major mindset shift. PE firms often add debt to the balance sheetto maximize return on equity. This is part of how they boost ROI — it’s not personal, it’s structural.

4. Sacred Cows Are Getting Cooked

Cousin Bob who’s “always been around” but doesn’t perform? He’s on the chopping block.
Private equity is all about economic performance, not emotional attachments. Any part of the company that doesn’t make sense financially is fair game.

5. They’ll Sweat the Assets

Entrepreneurs often focus on the P&L — profit and loss — but PE firms focus on the balance sheet.
Expect them to push harder on:

Selling off excess inventory
Delaying payments (increasing payables)
Speeding up collections (reducing receivables)

Why? To maximize short-term cash flow. This is what Jim calls "sweating the assets."

6. They’ll Take Special Distributions

If the business starts generating strong profits under new ownership, don’t expect all that cash to be reinvested.
PE firms often take special distributions — payouts to themselves as the new owners. Why?

“Because they can… and because they want to play with house money.”

🧠 Why This Matters for Traders & Entrepreneurs

Even though most traders or even self employed freelancers won’t sell a business to private equity, the mindset shift is worth studying:

Think in cash flow, not just growth
Have a clear exit or continuation plan
Build lean and operationally tight
Remove “emotional inefficiencies” from your own portfolio or systems

Private equity is ruthless, efficient, and focused on long-term value extraction. If you can adopt even a fraction of that mindset, you’ll start running your portfolio or business with precision over passion.