This is Part 4 of our series on EOS and Exit Planning. Read Part 1 | Read Part 2 | Read Part 3
Barry Fay has a pointed observation for private equity firms: “If you’re a PE firm, getting a company on EOS as your platform makes every bolt-on acquisition easier.”
Jeff Starin, whose insights we explored in Part 2, adds another dimension: “Some PE firms require that acquisitions implement EOS because they haven’t seen anything else that consistently and predictably increases enterprise value and employee satisfaction. Working with an EOS Implementer provides the framework and coaching to create consistency, scalability, solve people issues and increase profits.“
For business owners considering private equity (PE) as an exit path, understanding why PE firms may value EOS companies can help you position your business more strategically. For PE firms themselves, here’s why EOS-run companies make particularly attractive platform investments in the lower middle market segment.
What PE Firms Look For in Platform Companies
Private equity firms often acquire a “platform company.” This is a well-run business that becomes the foundation for a buy-and-build strategy. They then bolt on smaller acquisitions to expand market share, geographic reach, or capabilities.
The platform company needs to be more than profitable. It needs to be:
- Scalable: Systems and processes that can absorb growth
- Transferable: Not dependent on the seller
- Replicable: Clear operating model that can be extended to acquisitions
- Professionally managed: Strong leadership team and financial controls
Sound familiar? These are exactly what EOS helps build.
Why EOS Companies Make Ideal Platforms
When PE firms evaluate potential platform companies or consider implementing an operating system at their existing platform, EOS offers several distinct advantages:
Turn-Key Operations: If a PE firm acquires a successfully run EOS company as their platform, they usually get a business ready to run from day one. Documented processes, clear accountability, and systematic operations mean less time figuring out how things work. Even if the platform isn’t already on EOS, implementing it creates the foundation for systematic growth.
Proven Operating System to Scale: Once a PE firm has their platform running on EOS (whether acquired or implemented), they have a replicable system to roll out across every bolt-on. Instead of integration chaos, every acquisition learns the same structure, accountability, and processes. Tracy Butler, EOS Implementer and former business owner who sold to a PE-backed buyer, saw this firsthand: “The PE company that I was on the board for ran EOS and all the 13 companies in our peer group ran EOS.”
Reduced Owner Dependency: Most lower middle-market businesses are heavily owner-dependent, which PE firms know is one of their biggest risks. EOS companies solve this through Visionary/Integrator structure, documented processes, and strong leadership teams. This mitigates operational disruption when transitioning to new ownership. Tracy Butler experienced this directly when selling his business: “EOS gave our leadership team the structure and confidence to make decisions, which made them much more marketable and valuable. Not just to us, but to any organization…People that buy companies don’t buy individuals; they buy systems. EOS helped us build a sound business that wasn’t dependent on one or two people.”
Data-Driven Management: PE firms typically operate on metrics and financial discipline. EOS companies track weekly scorecards, maintain clean data, and make decisions based on numbers rather than instinct. This aligns well with how PE firms monitor portfolio companies.
What This Means for Business Owners
If you’re building toward an eventual exit and PE is a potential path, running EOS positions your business attractively:
Higher Probability of Sale: PE firms filter for well-run, systematized businesses. EOS demonstrates your company meets those criteria, increasing the likelihood of initial interest and successful diligence.
Better Valuation: EOS builds the intangible capitals that drive higher multiples. For PE buyers, reduced integration risk and proven systems can justify premium valuations.
Smoother Transaction: Documented processes, clear accountability, and clean financial data make due diligence easier.
Post-Close Success: EOS provides continuity after the sale. The business doesn’t need reinvention; it needs scaling using systems already in place. This matters for owners who care about employees and business longevity.
What This Means for PE Firms
If you’re a private equity firm building a platform strategy, getting your platform company on EOS (whether by acquiring one already running it or implementing it post-acquisition) creates significant advantages:
Lower Integration Risk: You have a proven, documented system for your platform to systematically roll out. This reduces variability and risk when integrating multiple acquisitions.
Faster Value Creation: With an operating system in place at your platform, you can focus bolt-on integrations on growth and optimization rather than building basic infrastructure at each company.
Replicable Model: Your platform’s EOS becomes the template for bolt-ons. This standardization creates portfolio-wide efficiency and ensures acquired companies operate with consistent discipline, accountability, and processes.
Stronger Exit: When it’s time for your own exit, you can demonstrate that portfolio companies run on proven, documented systems with strong management teams. This consistency strengthens your multiple.
The Bottom Line
EOS wasn’t created for exit planning or PE acquisitions. But its focus on systematization, accountability, documentation, and leadership development creates a powerful foundation for platform-and-bolt-on strategies.
For business owners: if you’re running EOS and PE is a potential exit path, you may be more attractive as a platform acquisition. And if a PE firm acquires you, your EOS foundation positions the combined entity well for future bolt-ons.
For PE firms: getting your platform company on EOS (whether you acquire one already running it or implement it at your existing platform) creates a replicable operating system that makes subsequent bolt-on integration faster, less risky, and more predictable.
As Barry’s insight suggests, implementing EOS at the platform level transforms how your entire portfolio operates.
This concludes our series on EOS and Exit Planning.
Read the full series:
Part 1: Why EOS Could Be Your Best Exit Planning Strategy
Part 2: How EOS Reduces Owner Dependency
Part 3: The Four Intangible Capitals That Drive Your Multiple
Part 4: The PE Platform Advantage: Why EOS Makes Bolt-On Acquisitions Easier (this article)
#EOS #PrivateEquity #ExitPlanning #BusinessValuation #MergersAndAcquisitions #PlatformCompany #FractionalCFO
