Selling to Private Equity Vs. Strategic Buyers ft. Eric Wiklendt

Written By Ryan Morrison

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Introduction

For entrepreneurs who've grown their companies to meaningful scale, the question eventually arrives: when is the right time to exit, and who should you sell to? Eric Wiklendt has spent over a decade on the other side of these transactions, leading investments at Speyside Equity and helping manufacturing business owners navigate one of the most consequential decisions of their careers.

In this conversation, Eric breaks down what founders should actually expect when selling to private equity versus a strategic buyer, how different PE firms approach value creation, and what's happening in the manufacturing sector as tariffs, automation, and workforce challenges reshape the industry.

 

Guest Snapshot

Name: Eric Wiklendt

Titles: Managing Director and Partner, Speyside Equity

Background: Former CEO of Kelix Heat Transfer Systems; previous leadership roles at Eaton Corporation and Hilti Corporation

Education: BBA from University of Notre Dame; MBA from The Wharton School

Current Focus: Middle market manufacturing investments with operational improvement opportunities

Additional Expertise: Corporate M&A, international manufacturing operations, special situations dealmaking

 

Three Exit Scenarios Every Founder Should Understand

When Eric sits down with business owners exploring a sale, he frames the conversation around three distinct pathways. Understanding where you fall on this spectrum matters more than most founders realize.

The Full Exit: You're done. The company transitions entirely to new leadership, and your involvement ends at close or shortly thereafter. For founders who've given everything to their business for a decade or more, this can feel liberating—or terrifying, depending on how much of your identity is tied to the company.

The Transition Exit: You stick around for six to twelve months to ensure continuity, then move on. This gives you time to hand off relationships, institutional knowledge, and operational details that don't live in any manual. It also gives the new owners time to learn what makes your business actually work, not just what the financials say.

The Continuation Vehicle: The equity structure changes, but you remain the primary operator. You've brought in capital and potentially new partners, but you're still running the show. This works well for founders who want liquidity but aren't ready to step away from the business they built.

Eric emphasized that honesty about which scenario you want matters tremendously. "You really should be thinking about how do I partner with that private equity firm and what do I want from the situation," he explained. Misalignment here creates problems that no amount of legal documentation can solve later.

 

How Speyside Approaches Manufacturing Deals Differently

Not all private equity firms operate the same way, and understanding these differences helps founders choose the right partner. Speyside's approach stems from the backgrounds of its team—they've all worked in manufacturing at the C-level or spent years doing operating partner work in similar companies.

The firm breaks value creation into two distinct phases:

Phase One: Operational Improvement Focus on EBITDA margin expansion through efficiency gains, better procurement, upgraded systems, and operational discipline. This phase addresses the low-hanging fruit that many owner-operators haven't had time or resources to tackle while growing the business.

Phase Two: Commercial Growth Once operations are humming efficiently, attention shifts to top-line expansion. Better sales force effectiveness, new market penetration, product line optimization—the kinds of growth initiatives that require stable operations underneath.

"We'll communicate that before deal close," Eric noted. "We spent a lot of time trying to listen and understand what people's needs are and then match the deal structure and the transformational plan to the go-forward agreement."

This contrasts sharply with firms staffed primarily by former investment bankers. Those teams tend to be "very transactionally oriented," as Eric put it, because that's what they learned on the sell side. The deal team closes the transaction, then hands it off to an operating team. The process feels more discrete and staccato rather than seamless and integrated.

For manufacturing businesses where operational expertise matters enormously, this difference in approach can determine whether the transition succeeds or fails.

 

Private Equity vs. Strategic Buyers: Understanding the Core Differences

Eric's early career included several years doing corporate M&A, which gave him perspective on how strategic buyers think versus financial buyers. 

Strategic Buyers Think in Perpetuity

When a strategic acquirer buys your company, they're assuming they'll own it forever. Valuation models reflect this with discounted cash flow analyses looking decades out. The buyer cares intensely about synergies—can they consolidate facilities, eliminate redundant costs, cross-sell products, leverage their distribution network?

"There's about seven kinds of things that you think through depending on what it is," Eric explained. Strategic buyers often care less about your top-line growth rate because they're focused on what happens when your revenue runs through their cost structure and distribution channels.

Private Equity Thinks in Exit Multiples

PE firms, conversely, have a defined hold period, usually three to seven years. They're buying your business at one EBITDA multiple and planning to sell it at a higher multiple. This creates a fundamentally different orientation.

If you've been running your business with breakeven cash flow while reinvesting everything into growth, expect this to change fast. PE firms care deeply about demonstrating consistent, growing profitability because that's what drives their exit valuation.

They're also thinking about who the next buyer will be. Is this a platform for add-on acquisitions? Does it have characteristics that will appeal to a larger PE firm or a strategic buyer down the road? Your business becomes a vehicle for their return thesis, not the end state.

 

The Surprise That Catches Growth-Focused Founders Off Guard

One of the biggest adjustments Eric sees founders struggle with: the shift from growth at any cost to profitable growth. Many entrepreneurs, especially those in venture-backed mindsets, have spent years focused purely on expansion. Breakeven feels like success. A small burn rate seems fine if you're capturing market share.

Private equity changes this calculus overnight. "Anything that pulls away from EBITDA is going to be problematic," Eric emphasized. The firm wants to see margin expansion, not just revenue growth. They want proof that the business can generate cash consistently.

This doesn't mean growth stops mattering. But the growth has to contribute to enterprise value in ways that show up in the P&L. New product lines, market expansion, sales force investments—all of these need to demonstrate clear paths to improved profitability within the fund's investment horizon.

For founders accustomed to prioritizing market share over margins, this transition requires both operational and psychological adjustment. You're no longer building for the next decade. You're optimizing for the next exit.

 

What Manufacturing Looks Like Right Now

The conversation shifted to present-day realities in manufacturing, where several forces are converging simultaneously. Eric's portfolio companies sit at the intersection of these trends, giving him ground-level visibility.

Tariffs and Reshoring

Eric described watching reshoring conversations evolve in real time. "We were looking at a couple of our companies that are more consumer goods companies," he shared, "and we're thinking, well, we're going to have to move some of our production back to the US because the cost of goods sold that we sell here in the US is going to be impacted in a negative way."

But the math isn't as simple as moving production and calling it done. You need capital to build or retrofit facilities. You need workers trained on your processes. You need supplier networks that can deliver components domestically. These transitions take time and money, and they're happening while companies try to maintain service levels and margins.

The firms that started this process earlier are better positioned now. Those who assumed tariffs would disappear or stayed fully offshore are scrambling.

The Workforce Challenge

Finding skilled manufacturing workers has become increasingly difficult. "Not everybody wants to do that, especially like the younger generations," Eric noted. 

The issue runs deeper than just attracting bodies to the factory floor. From a white collar perspective, Eric sees challenges finding people with genuine critical thinking skills. "Everybody can follow the rubric," he observed, "but finding people that can think creatively, finding that creative quotient person is not as easy as it once was."

What Speyside values most—people who combine strong analytical capabilities with creative problem-solving—has become harder to source. "Judgment is what really matters at the end of the day," Eric said. "There's no simple, easy rubric for doing private equity."

Automation, AI, and the Future of Manufacturing Jobs

Eric pushed back on extreme predictions about AI and automation eliminating all jobs. He invoked Milton Friedman's famous anecdote about excavators versus shovels versus tablespoons—better tools don't destroy economic opportunity, they change where the opportunities lie.

"New tools and techniques and work improvements always come to fruition," he argued. "It's just a question of how do you use those things to create economic growth and create GDP?"

His view: AI, robotics, and automation will expand GDP by enabling more output with existing workforce constraints. Workers won't disappear; their roles will evolve. Instead of making products directly, they'll maintain robots, manage AI systems, oversee Internet of Things networks.

"Frankly, we don't have enough people to do all the manufacturing work anyway," Eric added. Technology doesn't eliminate the need for workers, it transforms what those workers do and potentially increases what they can earn.

 

The K-Shaped Economy and What It Means for Manufacturing

When asked about current economic conditions, Eric confirmed: "I think the K-shaped recovery is accurate. If you're an owner of assets, it's not so bad. Inflation doesn't affect wealthy people as much as it affects people who are lower socioeconomic classes."

This matters for manufacturing specifically because the sector creates middle-class jobs that can narrow this divide. Bringing production back to the US means creating well-paying positions for people maintaining advanced manufacturing systems.

"I do believe that too much concentration of wealth in one group of people over time is not a great thing," Eric reflected. "One of the best things about the United States of America is that generally over the history of the country, people have felt like if I'm willing to work hard, put in the time, invest, save, I can be very affluent if done right."

Maintaining that pathway requires creating opportunities. In Eric's view, education reform ranks among the most important levers available. Better educational systems create better opportunities for wealth creation across socioeconomic groups.

 

Key Takeaways for Entrepreneurs Considering an Exit

Be honest about what you want. The three exit scenarios aren't interchangeable. Choose based on your actual goals, not what you think buyers want to hear.

Understand your buyer's incentives. Strategic buyers optimize for synergies and perpetual ownership. PE firms optimize for multiple expansion and exit value. These different orientations create different post-deal dynamics.

Expect the EBITDA conversation. If you've been running breakeven or close to it while prioritizing growth, prepare for that to change under PE ownership. Margin improvement will become a primary focus.

Not all PE firms are alike. Operator-led firms like Speyside approach deals and value creation differently than teams built from investment banking backgrounds. Ask about the team's experience and how they've actually created value in past portfolio companies.

Manufacturing faces both challenges and opportunities. Workforce constraints, automation, reshoring, and tariffs are all live issues. Companies navigating these well will have advantages. Those ignoring them will face problems.

 

Memorable Quotes

"You really should be thinking about how do I partner with that private equity firm and what do I want from the situation. We spent a lot of time trying to listen and understand what people's needs are."

"Anything that pulls away from EBITDA is going to be problematic."

"We think about our firm as a firm for operators built by operators because we all come from that background."

"New tools and techniques and work improvements always come to fruition. It's just a question of how do you use those things to create economic growth and create GDP?"

"Judgment is what really matters at the end of the day. There's no simple, easy rubric for doing private equity."

 
 

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Ryan Morrison
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