What’s missing in those private equity deals? | Jerry Epperson

I am sitting at home, and I get a text photo of a door with a sign that a highly recognized upholstery manufacturer in western North Carolina had closed all its operations without notice. No more details. If I remember correctly, this company has been owned by a Southern investment banker’s private equity operation.

By the way, the owner of Lane Furniture called his investment business Stage Capital. And Klaussner was owned by a large private equity firm, Monomoy.

I could list about 100 more PE firms in that have invested in some manner in our industry. Our firm is courted daily by private equity firms, hoping we can lead them to their next good investment in home furnishings.

Most private equity firms raise their funds to invest from wealthy individuals, family companies with funds to invest, colleges and other educational organizations, religious groups like the Catholic Church, insurance companies of all sorts and others like large corporations.

Today there are thousands of private equity firms that all engineer their businesses to build a portfolio of successful companies. Some focus on a segment like real estate, consumer goods or the Internet, and most have size limits and requirements.

One fund I know well is based in Paris, with offices around Asia and North America and it can develop products anywhere and then make it wherever is best using funds from around the globe. These are smart people, but they, like most PE firms are dependent upon finding intelligent, knowledgeable, honest and talented people to help them and their money take each investment to its next level.

The home furnishings segment appears so simple to outsiders, but we all recognize the complexities necessary to really succeed. And we can all name individuals who have misrepresented their knowledge and experience, and have led some of our biggest and best companies into ruin. And got rich doing it.

Maybe that is what is missing in this huge business: a better source of the right people who can build successful home furnishings businesses.

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