We are operators of businesses that invest in the businesses we operate. This means we understand and respect the many challenges that business owners face far better than other potential acquirers. We realize that most business owners face two big challenges:
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Time - Not enough time to pursue good opportunities that they’d like to go after
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Risk - Concentration of risk because the owners’ business represents generation(s) of effort to build a business along with much of the owners’ net worth.
We established Fourth Exit Capital to tackle these problems. We work intimately with acquired businesses to jump-start under-developed opportunities that an individual owner does not have the time or ability to explore. While this varies by company, it can mean taking over the CEO role from a retiring founder to working every day at the business to improve processes or seeking additional customers and building sales channels. We also provide the capital required to enable owners to monetize their most valuable asset and provide liquidity for their long-term needs.
While we’d like to think that we are an attractive acquirer, we want to be upfront about your options as a seller. As you think about an exit strategy, there are several paths you can consider:
A Strategic Acquirer is likely someone you already know: a competitor, customer, or supplier. While offering the benefit of familiarity, Strategic Acquirers typically look to take advantage of one or two key aspects of your business like a certain technology or key customers and discard the rest (including employees, brand names, suppliers, etc.). They will usually attempt to integrate these cherry-picked parts of your business into their existing operations and wind down the rest because they already have a functioning business. This can dramatically impact the employees who helped you build your business to this point. Furthermore, many Strategic Acquirers will act interested in acquiring your business to learn key competitive information and ultimately not close a transaction after obtaining these key insights.
Traditional private equity investors are all about the numbers and they typically have roughly five to seven years to buy and flip their investments to keep their investors happy due to their 10 year investment fund cycle. This means they are focused on short term decisions to pump and dump as quickly as they can to maximize their ROI as soon as possible. Additionally, the private equity investors have often only worked in finance their entire lives, so they often don’t actively participate in hard work that’s required to build a business. Instead, they hire outside consultants who try to force the business into a predetermined framework instead of tailoring their goals to the business. This flip and rent consultants to do the work attitude is why you’ll also see many private equity investors brag about the number of deals they’ve done since they are not personally involved in building the businesses they invest in.
Fourth Exit Capital is different. We are funded by a group of successful entrepreneurs who seek to invest in the types of companies they built as entrepreneurs. Our source of funding is a distinguishing factor because we don’t have the same time constraints to buy and sell businesses that traditional private equity investors face. This enables us to invest time and money in longer term improvements that are built to last. Let us be clear, we’re not saying that financial numbers don’t matter because that would be irresponsible. All for profit businesses ultimately seek to make a profit, but we tend to focus on building long term value through things like training employees to increase their skills which doesn’t typically have an immediate impact, but pays dividends over time.
Upon closing an acquisition, we take an active role in building the business. We bring years of experience in investment, sales, marketing and operations. For more on our process, please see the Process section of our website.
Our ultimate goal is to build upon the foundation that an owner has established with our sweat equity and financial investment to form a bigger stronger business for the long-term. We believe our combination of human and financial capital offers the best opportunity for owners to secure the future for their business, family, employees, customers, suppliers, and legacy.
