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What Happens to the 73% | Built to Sell News

According to Adam Coffey, this week’s guest on Built to Sell Radio, 73% of owners leave the company they started soon after selling to private equity.

Some founders resign from their role as CEO. Others get fired.

Adam spent 21 years as a CEO and investor in three national service companies backed by nine private equity sponsors. During that time, he completed 58 acquisitions and generated more than one billion dollars of value at exit. Adam shared his private equity playbook with Built to Sell Radio this week, and the episode stands as a rare glimpse inside the mind of a private equity acquirer.

Owner vs. CEO

When you launch a business, the roles of owner and CEO are one and the same, often remaining closely connected until your company is acquired.

When you sell, you’ll likely be asked to stay on as CEO of your company (or division head of your business inside a larger entity) for a period of time to help the new owner monetize what they have bought. You might have an earn-out, or in the case of an acquisition by a private equity group, you may be asked to become a “rollover investor” in your acquirer and stay on as CEO. In any case, the roles of CEO and owner diverge when professional investors secure a majority stake in your business.

If you’re asked to stay on as CEO, you will be asked to execute the strategic plan the board approves. You now have a boss (the board), and they will continuously be asking themselves if you are the best person to get them a return on the investment they have made.

If they conclude you are not the best CEO they can find, most professional investors won’t hesitate to swap you out with someone else. According to Adam Coffey, 73% of founders who sell to private equity do not last in the CEO role through the private equity hold period.  

You may lose your job as CEO, but that doesn’t mean you give up the equity you rolled. That’s because the roles of CEO and equity holder are different. One means you work for the company; the other means you own part of the company. Although the roles of owner and CEO are effectively the same when you start a business, they are treated differently once an acquirer buys in.

Clip of the Week

In this clip, Adam Coffey breaks down the private equity playbook and reveals how PE groups make money.

Quote of the Week

“This is the epitome of business as a professional sport. You just joined an NBA team, and you got to practice. And you got to practice hard. Michael Jordan still went to practice. Kobe Bryant still went to practice. They got pissed off when other prima donnas decided they didn’t need to practice. You know, it’s like you win as a team.”

– Adam Coffey describes the culture of running a company after a private equity investment


Rogan’s, a footwear company operating for 53 years with 28 stores in Wisconsin, Minnesota, and Illinois, has been acquired by Shoe Carnival, Inc. (Nasdaq: SCVL). Rogan’s generated approximately $10 million in operating income in 2023, implying a valuation of 4.5 times operating income.

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