The private equity (PE) market is in a state of flux. Exit opportunities are constrained, IPO windows are narrowing, and liquidity expectations from limited partners (LPs) are becoming harder to meet. It’s making PE firms more selective than ever. They're not just looking for companies with strong revenue. They're looking for operational excellence, audit readiness, and scalable infrastructure. For family-run businesses, this presents a challenge and an opportunity.
If your company is still operating on QuickBooks, Excel, or a patchwork of legacy systems, a new approach might be in order.
A common scenario: a private equity firm acquires a successful, family-run company with solid EBITDA and a strong customer base. The systems, however, are another story. Financials are cobbled together in spreadsheets and operational data is scattered across departments. Audit trails are nonexistent. Information is difficult to analyze and even harder to verify.
For the family that built the company, this approach made sense. Trust and institutional memory filled the gaps that systems did not. A walk through the shop floor, a quick conversation with a cousin in accounting, or a nod from the owner was all it took to run the business effectively. But when a PE firm enters, informal guardrails are no longer sufficient.
Auditors come in, control gaps are exposed, and compliance risks surface. The inevitable result is a mandated cloud ERP implementation that is closely monitored and often rushed under investor scrutiny.
That’s where the real cost sets in.
An ERP implementation under PE ownership is an entirely different animal. The systems must now satisfy operational needs and investor expectations, auditor reviews, and internal control requirements that closely resemble SOX compliance. This doubles the implementation timeline and cost. What could have been a $400,000 - $800,000, 6-month project under family ownership becomes a $2-$3 million, 12-18 month initiative with rigid governance and documentation.
Change management also becomes more difficult. In many cases, the family’s role in the organization is reduced or phased out. As new management is introduced, legacy employees with decades of company knowledge see the ERP system as a symbol of the takeover.
The smart PE firms know this. They’re growing more hesitant to acquire companies with weak systems. They can afford to be picky.
Here’s the good news: family-run companies have a unique window of opportunity to act before PE money enters the picture.
By investing in a modern cloud ERP system now, private companies can:
Without the need for auditor oversight or SOX-Lite controls, a private company can implement an ERP at half the cost and in half the time. There’s no need for exhaustive governance documentation, which gives the company flexibility to make changes late in the project. This doesn’t mean cutting corners. We have developed methodologies to help family-run companies control costs while ensuring success.
Change is hard, but it’s easier when it happens “among friends.” We’ve seen it firsthand: employees who resisted change embraced new systems with just a little one-on-one guidance. In one case, an employee skeptical of ERP came around after we simply gave them a second monitor to show how much easier their job could be.
ERP doesn’t just make you more attractive to investors—it actually makes your business better. Automating paper-based processes can reduce errors and improve real-time visibility. Whether employees are family or not, they’ll benefit from a modern platform that helps them work more efficiently.
In a crowded PE market, standing out matters. Having a modern, scalable ERP system signals to investors that the business is professionally run, prepared for growth, and capable of supporting portfolio-level roll-ups or integration. In fact, many PE firms see ERP-enabled companies as “platform plays” they can build around.
A modern ERP system can be extended to others in a PE firm’s portfolio. This adds even more value in the eyes of a buyer looking for scalable infrastructure across its holdings.
Waiting until a PE firm requires an ERP implementation adds too much cost and complexity. Get ahead and turn ERP into a strategic advantage to send a powerful signal to investors before a PE firm enters the picture.
At Trenegy, we help organizations navigate ERP implementations and keep the project on time and on budget. To chat more about ERP, email us at info@trenegy.com.
Trenegy is a non-traditional consulting firm based in Houston, Texas.