Private Equity's $3 Billion Temptation

There has never been so much money chasing so many businesses ready to sell. But. But. But.

Good morning!

Here are today’s highlights:

  • The SBA simplifies PPP loan forgiveness.

  • Retailers find themselves back on the frontlines.

  • And businesses find a pandemic silver lining in QR codes.


Private equity has never been more alluring: Private equity firms have amassed cash reserves of as much as $3 trillion—a number that has risen dramatically since 2014. As a result, many business owners and entrepreneurs are faced with the question of whether selling to private equity is the right move. And as Raegan Moya-Jones experienced in her company’s beginnings, private equity firms can fortify a young company with financial and sometimes even moral support to help a founder reach new levels of success. But it’s important to understand that private equity investors are often more interested in short-term profits than a company’s long-term health.

  • “‘These are the best salesmen in the world. They can raise tremendous amounts of capital, and they can convince people to do things that only later they say, ‘Why? Why did I do that?’”

  • “‘I’ve had the best and worst experience with two separate PE firms. There are definitely good ones out there, you just need to be vigilant with the diligence when vetting them.’” READ MORE

The SBA is simplifying loan forgiveness for smaller borrowers—but not all banks are participating: “About 2 million business owners with PPP loans of $150,000 or less will soon be allowed to apply for loan forgiveness directly through the SBA instead of their banks. There are about 7.1 million PPP loans that remain outstanding and about 6 million are for $150,000 or less. Eligible borrowers will receive an email from the SBA with a link to the online portal, said Patrick Kelley, associate administrator for SBA’s office of capital access. The application should take less than 10 minutes to complete, he said, and the SBA has created a customer service line to answer borrower questions.”

  • “Banks responsible for originating the PPP loans must opt into direct forgiveness before their borrowers can use the SBA’s online platform, a decision that could potentially limit the initiative’s reach. Currently, over 500 banks, representing 30 percent of qualifying loans, have agreed to let their customers apply for forgiveness using the SBA portal, which begins accepting applications on Aug. 4.”

  • “The Consumer Bankers Association, a trade association for some of the nation’s largest retail banks, said the new forgiveness platform will save small businesses time, while making the program opt-in allows ‘lenders the choice to retain oversight of their customer relationships.’” READ MORE


For businesses, QR codes are a pandemic silver lining: “When people enter Teeth, a bar in San Francisco’s Mission neighborhood, the bouncer gives them options. They can order food and drinks at the bar, he says, or they can order via a QR code. Each table at Teeth has a card emblazoned with the code, a pixelated black-and-white square. Customers simply scan it with their phone camera to open a website for the online menu. Then they can input their credit card information to pay, all without touching a paper menu or interacting with a server.”

  • “A scene like this was a rarity 18 months ago, but not anymore. ‘In 13 years of bar ownership in San Francisco, I’ve never seen a sea change like this that brought the majority of customers into a new behavior so quickly,’ said Ben Bleiman, Teeth’s owner.”

  • “Restaurants have adopted them en masse, retailers including CVS and Foot Locker have added them to checkout registers, and marketers have splashed them all over retail packaging, direct mail, billboards and TV advertisements.”

  • “​​QR codes have allowed some restaurants to build a database of their customers’ order histories and contact information. At retail chains, people may soon be confronted by personalized offers and incentives marketed within QR code payment systems.” READ MORE


GDP growth hit 6.5 percent in the second quarter, exceeding the pre-pandemic pace: “The growth came as business reopenings and government aid powered a surge that is expected to gradually slow in coming months, with Covid-19 variants and materials and labor disruptions clouding the outlook. Second-quarter growth fell short of economists’ forecasts. Economists surveyed by The Wall Street Journal estimated that gross domestic product, the broadest measure of goods and services made in the U.S., grew at an 8.4 percent annual rate in the April-to-June period.”

  • “Still, the growth propelled GDP beyond pre-pandemic levels, a milestone that underscores the speed of the recovery that began last summer.” READ MORE

Business owners are feeling more confident: “In the Capital One Business Survey, released July 27, 72 percent of owners reported their company's financial situation is the same or better than before the pandemic. Six months ago, according to the press release, that number was 53 percent. Optimism is also up: 94 percent of respondents said they were confident their business would be operating in six months, compared with 85 percent in December 2020. Two-thirds said they plan to grow their businesses in the next six months.”

  • “One caveat to the rosy statistics is that the survey was taken in early June, before widespread alarm emerged about the Delta variant of Covid-19.” READ MORE

In Philadelphia and other cities, the cost of ride-sharing is way up: “In Philadelphia and around the country, a shortage of drivers is pushing prices for Uber and Lyft rides to record highs, with fewer cars on the street and longer wait times for customers. Cities have been opening up, so the demand is there. On the supply side, many gig workers who drove for the services before Covid-19 have been reluctant to return. ‘This situation is just going to [tick] people off and push them away,’ Williams said.”

  • “Some former drivers still worry about taking on passengers with the highly contagious Delta variant causing a spurt of coronavirus infections. Some have a cushion from enhanced unemployment payments.”

  • “And others found better options in a tight labor market that is giving workers more leverage than they’ve had in some time.”

  • “Most analysts, and the companies themselves, project the supply of drivers will increase after Labor Day as schools and more workplaces reopen, depending on the course of Covid-19.” READ MORE


More private companies will require employee vaccinations: “Google also said it is delaying its work force’s return to the office until mid-October, after the Alphabet Inc. subsidiary previously planned to get most staff back on campus at the end of September. Chief Executive Sundar Pichai told employees in a note Wednesday that the Mountain View, Calif.-based company would begin requiring anyone on its U.S. campuses to be vaccinated in the coming weeks. He said Google would expand that requirement to other countries in future months. Mr. Pichai said that he hoped that the vaccination requirement would give its workforce of more than 135,000 employees across more than a dozen states and 50 countries ‘greater peace of mind as offices open.’”

  • “Also on Wednesday, Netflix told its producers it would require everyone working in close contact with actors on U.S. productions to be vaccinated, a company spokesman confirmed.”

  • “Workplace vaccine mandates have been rare so far because such requirements can prompt employee lawsuits and trigger confrontations with noncompliant staff, employment attorneys say. They also risk companies’ losing out on talent in a tight labor market.”

  • “At Gulf Coast Bank & Trust, a roughly 775-person bank based in Louisiana, executives discussed imposing a vaccine mandate but decided against it, feeling that wasn’t the role of a private business, said CEO Guy T. Williams.” READ MORE

Are there legal grounds for employees to oppose a vaccine mandate? “If there are no religious objections or disabilities, it is unlikely any challenge would prevail, particularly where employees are given an alternative to vaccination: weekly Covid-19 testing and wearing masks, said Tanya Blocker, a labor and employment attorney based in New York City. ‘It’s almost as if that’s a compromise,’ she said. Even if an employee doesn’t get vaccinated for religious or medical reasons, Ms. Blocker said it would be difficult to also claim that antidiscrimination laws apply to getting tested via nasal swab before coming back to work.”

  • “‘They really don’t have a leg to stand on,’ said Ms. Blocker of legal objections to mandatory testing. ‘What underlying medical condition do you have that would interfere with a nose swab?’” READ MORE

Retailers find themselves on the frontlines again: “Updated guidance from the government on pandemic precautions has put retailers in a position they thought they were past: deciding whether or not to mandate masks for customers and employees. The new recommendations by the Centers for Disease Control and Prevention call for wearing masks again in places where the virus is spreading fast and cover nearly two-thirds of U.S. counties. Just two months ago, the agency said fully vaccinated people could remove their masks. But the Delta variant of the coronavirus has changed the safety equation and the guidelines.”

  • “Starbucks and Chipotle still allow customers to enter their locations without wearing a mask, except where required by local regulations or law, according to their websites. Officials for Macy’s, Target, Walmart and Kohl’s did not have any immediate comment.”

  • “‘The safest course of action to be able to have something to refer to is to simply say we plan to adhere to C.D.C. guidelines,’ said Joel Bines, who leads the retail operations at the consulting firm Alix Partners. But he said many companies he was speaking to were not prepared to reverse course on masks.”

  • “‘You have a set of retailers who have evaluated the data and the information and are coming to the conclusion that they’ve already made the change that they’re going to make and they’re not planning on going back,’ Mr. Bines said.” READ MORE


Ben and Jerry explain why they are proud that their company took a stand: “While we no longer have any operational control of the company we founded in 1978, we’re proud of its action and believe it is on the right side of history. In our view, ending the sales of ice cream in the [Israeli-] occupied territories is one of the most important decisions the company has made in its 43-year history. It was especially brave of the company. Even though it undoubtedly knew that the response would be swift and powerful, Ben & Jerry’s took the step to align its business and operations with its progressive values. That we support the company’s decision is not a contradiction nor is it anti-Semitic. In fact, we believe this act can and should be seen as advancing the concepts of justice and human rights, core tenets of Judaism.”

  • “We believe business is among the most powerful entities in society. We believe that companies have a responsibility to use their power and influence to advance the wider common good.” READ MORE


Episode 70: Oh, No! They Accepted Our Offer: This week, Laura Zander, Diana Lee, and Dana White all share big news. Laura tells us that she and her husband/co-founder Doug put in a bid to buy a building for their business in Reno—and she’s not sure how she feels about the fact that their offer was accepted. Diana explains why she’s decided to pay a fortune to take over space vacated by glitzy magazine company Conde Nast in Manhattan’s Freedom Tower, a move that required her to put down a $2 million security deposit. And Dana tells us that she’s had preliminary conversations about opening Paralee Boyd salons on U.S. military bases around the world.

If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren