M&A Readiness
Valuation & Structure
How buyers value businesses and structure deals — EBITDA multiples, addbacks, earnouts, rollover equity, asset vs. stock sale, and tax implications.
36 articles
Minority Recapitalization Governance Rights: What Founders Give Up Without Selling Control
A minority recap can feel like taking capital without giving up control, but governance rights can change how the business is run. Founders need to…
Capex Normalization in M&A: Deferred Maintenance and EBITDA Risk
For businesses with significant fixed assets, equipment, vehicles, machinery, or facilities, PE buyers normalize EBITDA for maintenance CapEx and…
363 Bankruptcy Sales: Buying or Selling a Business Through Chapter 11
A 363 sale allows a distressed business to sell assets free and clear of liens, claims, and encumbrances, giving buyers clean title and giving…
Selling a Job Shop: How Buyers Value Custom Manufacturers
Job shops and custom fabricators are evaluated differently than branded manufacturers. Buyers focus on revenue repeatability, equipment utilization,…
Selling a Distribution Business: How Buyers Model Margins, Inventory, and Working Capital
Distribution businesses are bought and sold on fundamentally different economics than service businesses.
Selling a Staffing Business: How Buyers Evaluate Bill Rate Spreads, Mix, and Client Concentration
Staffing businesses are valued on gross profit per employee, revenue mix, and client concentration, not revenue.
Selling a Consumer Brand: How Buyers Value DTC, Wholesale, and Omnichannel Businesses
Consumer brand M&A is driven by channel economics, brand loyalty, and unit economics, not just revenue and EBITDA.
Private Credit Readiness in M&A: What Direct Lenders Underwrite Before a Buyer Can Pay You
Private credit has become a core source of acquisition financing. Sellers who understand direct lender diligence can reduce financing risk before a…
Escrow and Holdback Mechanics at M&A Closing: What Founders Need to Know
At closing, typically 10–15% of proceeds are held in escrow for 12–18 months to cover indemnification claims.
Exit Waterfall Mechanics: How Deal Proceeds Flow at Close in a PE Transaction
At close, the headline purchase price distributes through a defined payment stack, debt payoff, transaction fees, escrow holdback, seller notes,…
Section 280G Golden Parachute Tax: What Founders and Executives Need to Know Before Closing
Section 280G imposes a 20% excise tax on executives and a loss of deductibility for the company when change-of-control payments exceed three times…
Deferred Revenue in the Working Capital Peg: The Closing Adjustment Founders Miss
Deferred revenue treatment in the working capital peg is one of the most contested and least-understood closing adjustments in lower middle market…
How Buyers Finance Acquisitions: Debt, Equity, and What It Means for Your Deal
A PE firm's bid is only as good as its financing. Understanding how buyers stack capital, and what makes your business easy or hard to finance,…
ESOP as a Business Exit: What Founders Need to Know Before Ruling It Out
ESOPs remain a $100B+ annual transaction market by recent public estimates. For the right founder, they offer tax advantages and cultural continuity.
Representations and Warranties Insurance: A Founder's Guide
Rep and warranty insurance has transformed M&A deal mechanics in the middle market. For sellers, it reduces post-close indemnification exposure. For…
How Buyer Leverage Affects Your Deal Price and Structure
Most founders understand that PE buyers use debt to finance acquisitions, but fewer understand how the amount of debt a buyer can raise, and at what…
Seller Financing in M&A: How Seller Notes Work, When to Accept One, and What They Cost You
A founder sold her firm at $24M, accepted a $3M seller note, and saw payments suspended after a covenant breach. Seller financing is real credit risk.
Pre-Sale Tax Planning: The Decisions That Have to Happen Before You Sign
On a $20M transaction with $15M of gain, the difference between a C-corp asset sale and a qualified QSBS stock sale can exceed $3.5M after tax.
Working Capital Peg: The Closing Adjustment Most Founders Do Not See Coming
A manufacturing business sold at headline value, then lost over $1M at close because the working capital peg treated deferred revenue as debt-like.
EBITDA Addbacks: What Buyers Allow and What They Challenge
At 6x EBITDA, a $100K unsupported addback costs $600K of enterprise value. Buyers reject the ones with weak documentation first, here's which…
Management Equity Before a Sale: How to Lock Up the Team Buyers Want
A CFO departure in month six of PE ownership can cost $200K–$400K. Management equity buys post-close performance insurance that buyers value.
Seller Financing in Middle Market M&A: When to Take a Note and What to Negotiate
A $2.4M seller note subordinated to $6M of senior bank debt can generate roughly $85K per quarter until a single covenant breach triggers a…
The EBITDA Addback Bridge: What Makes Addbacks Credible Under Diligence
A $500K addback bridge that is half-documented walks into diligence with $250K at risk. At typical LMM multiples, that can mean $1.25–$1.75M of value.
How Private Equity Actually Models Your Business
A PE buyer at 7x entry with 5x leverage on a $20M EBITDA business is writing a $40M equity check. The offer price is the maximum the model will…
Rollover Equity in Middle Market M&A: What Founders Need to Understand Before They Sign
A 20% rollover in a PE deal that returns 3x MOIC can add 60%+ to total proceeds. The percentage matters less than the protections around it.
Asset Sale vs. Stock Sale: How Deal Structure Determines What You Keep
Asset vs. stock structure can cost a seller $500K–$1.5M in additional taxes on a $15M deal. Most founders don't model it until after the LOI is…
The Recapitalization Option: Taking Chips Off the Table While Keeping Upside
Founders who complete a minority recap and hold through a subsequent full sale achieve median total proceeds 35–55% higher than those who sold 100%…
Management Buyout (MBO): A Founder's Guide
Management teams buy at the lowest defensible price, without a parallel market check, founders routinely leave 0.5–1.5x EBITDA on the table. Here's…
Asset Sale vs. Stock Sale: Tax Implications for Founders
Whether a deal is structured as an asset sale or a stock sale can change founder after-tax proceeds by hundreds of thousands of dollars. Here is what…
Earnout Metric Negotiation: How the Definition of the Metric Determines the Outcome
EBITDA earnouts pay in full less often than revenue earnouts because measurement methodology is easier to dispute. The metric definition determines…
Section 1202 QSBS: The Tax Exclusion Most Founder-Owned Business Sellers Have Never Heard Of
Section 1202 can eliminate federal capital gains tax on up to $10M of gain, saving a qualifying founder $2.38M at a 23.8% combined rate.
Management Incentive Plans in PE-Backed Transactions: What Every Key Employee Needs to Understand
A phantom equity MIP with a 1.5x hurdle on a $30M deal pays nothing until the PE firm returns $45M, then taxes proceeds at 37% ordinary income rates.
Real Estate in M&A: Sale-Leaseback, Own vs. Lease, and How Property Affects Your Transaction
Most PE buyers prefer not to acquire owner-occupied real estate. On a $3M EBITDA business at 7x, market-rent normalization can reduce enterprise…
How to Value a Business for Sale: What Middle Market Founders Need to Know
Two businesses with the same EBITDA can trade at 3.5x and 7x. The $3.5x gap is management independence, revenue quality, and documentation, not the…
Working Capital Targets in M&A: The Deal Term Founders Underestimate
38% of LMM transactions close with a working capital shortfall, median hit is $340K. Most founders never model the peg until the closing statement…
Earnouts in M&A: Why Founders Don't Get Paid What They Expect
Earnouts pay in full less than 44% of the time. Here's why the structure almost always favors the buyer, and how to negotiate one that actually pays.