Editor's note:Bob Goldsmith is co-founder and president of Northern Edge Advisors, a boutique investment bank and financial advisory firm based in New York City. The views expressed in this article are solely those of the author.

Family businesses are facing a succession crisis. According to research from the University of North Carolina at Charlotte and Cornell University, these enterprises contribute more than half of U.S. private-sector GDP, or $7.7 trillion, yet only 40% survive to the second generation of ownership.

For families deciding to sell their businesses, the widespread bias against private equity firms—often fueled by widely reported cases of bad behavior—is unfortunate. In a recent New York Times article titled "Private Equity Is Gutting America—and Getting Away With It," federal prosecutor Brendan Ballou wrote about the damage some PE acquisitions have caused across industries; Vox author Emily Stewart also claimed in 2020 that PE "kills everything you love," in response to PE's role in Toys "R" Us's demise.

Business owners often assume PE buyers will only make predatory offers and pose a risk to the ongoing health of their businesses and the communities they serve. Conversely, they speculate that strategic buyers in the industry will pay higher prices and be easier to work with.

However, if they overweigh these negative views that reflect only part of the reality, business owners may make counterproductive and costly decisions when selling their companies. Admittedly, there are bad actors in the private equity industry, but there are also quality players. Business owners should not overlook the advantages these firms can offer. In several scenarios, business owners should keep an open mind.

First, for business owners who wish to retain some control and involvement, PE firms offer an attractive solution. Strategic buyers typically require full ownership of the acquisition target in order to consolidate financial statements and integrate operations. In contrast, PE buyers focus on alignment of interests and continued participation, encouraging business owners to retain equity stakes and management roles. As a result, business owners can continue to contribute to the company's growth while also having the opportunity to realize substantial future returns.

Second, many business owners still grappling with pandemic burnout but not yet ready to retire would value some liquidity to diversify assets or gain peace of mind, while also receiving operational support within the company. They are often overwhelmed by the immense demands of day-to-day operations, leaving no time to consider or even implement long-term strategic planning, such as expanding into new channels or geographies, recruiting top executives, or building a sales team. PE can typically address all these needs comprehensively: providing business owners with cash, dedicated operational resources, and enabling them to focus on the most critical areas of growth.

Additionally, for business owners with limited capital and other resources, PE is also a powerful option. PE firms typically expect that, over time, their additional investments will at least match the initial outlay when making an acquisition. Especially for businesses planning to grow by acquiring other companies, PE can serve as a valuable resource for executing a "buy-and-build" strategy. With in-house business development professionals, PE provides capital, assists in identifying targets, improves the quality of deal evaluation and execution, and accelerates transaction timelines. PE investors also add extra value to their portfolio companies by providing networks, peer groups of experts, and insights from other businesses in which they have invested.

Finally, for business owners seeking to sell amid current economic uncertainty, PE remains open for business. Driven by fund lifecycles, PE firms have a financial incentive to deploy capital. Management consulting firm Bain recently reported that, despite macroeconomic challenges, the PE industry recorded its second-strongest annual performance last year and currently holds $3.7 trillion in liquid assets, so-called "dry powder," available for deals in 2023 and beyond. Moreover, in increasingly volatile markets, PE firms often seek add-on acquisitions of private middle-market companies to strengthen their existing portfolio companies.

Excluding PE from the negotiating table could mean missing out on opportunities. Business owners planning to sell should run a competitive process that includes a diverse range of potential buyers, including PE firms, and, with the assistance of experienced advisors, ensure they identify the right partner and structure the deal to align with their goals. Through careful due diligence and leveraging an investment banking partner, business owners can harness the best qualities of PE to their advantage.