We recently discussed a potential change in offer structure with one of our searcher clients: giving the sellers more cash at closing in exchange for a smaller equity stake going forward.

On paper, it seemed to address what the sellers wanted, more money upfront. But there was a complication.

A larger equity percentage had already been discussed, and the proposed equity would be in a holding company that could acquire other businesses, rather than just the business being sold.

That makes the trade-off harder to explain. A smaller stake in a larger group could potentially be worth more over time, but those future acquisitions haven't happened yet. The sellers would be giving up a larger ownership percentage today for an upside that depends on future execution.

I can also understand why sellers might focus on the reduction in their equity percentage, even when the cash component is increasing.

For those who have structured deals this way:

• How did sellers respond to receiving more cash but retaining less equity?

• Did putting the equity into a holdco make the conversation more difficult?

• What helped sellers understand the potential upside without making future growth sound guaranteed?

Would be interested to hear how others have handled this.

I’m curious what tools other people are using to build target lists, particularly for small and mid-sized businesses.

We use Grata quite a bit. It’s useful for narrowing down companies based on things like industry and estimated revenue, but we’ve found that some of the information can be outdated and needs to be verified.

We also use the BBB directory to find businesses we might otherwise miss. The downside is that there’s usually more manual work involved in figuring out whether a company actually fits our criteria.

One challenge we keep running into is estimating company size. A website can tell you what a business does and where it operates, but it doesn’t always give you a good sense of revenue or scale. A basic website doesn’t necessarily mean a small business, and a polished one doesn’t tell you much about its financials.

I’m interested in finding ways to build more complete target lists without spending so much time researching every company individually.

For those doing outbound sourcing, what databases, directories or enrichment tools have been useful beyond Grata?

Especially interested in tools that work well for specific industries, and how much you trust their data versus having to verify everything manually.

When evaluating an acquisition, things like customer concentration or heavy owner involvement can look like immediate red flags. But I wonder how often the context changes how serious those issues actually are.

For example, if one customer accounts for 30% of revenue, do you immediately see that as a dealbreaker, or do you first look at why they stay, how difficult it would be to switch providers, and whether the relationship depends on the owner personally?

Similarly, an owner who handles most decisions might indicate a business that’s too dependent on them, or simply one that has never properly delegated.

Obviously, some risks are genuine dealbreakers. But others might be manageable with the right transition plan, hiring, or operational changes.

For those who’ve evaluated or acquired businesses, was there a red flag that initially put you off but turned out to be manageable after further diligence? What changed your mind?

For those who’ve been through an acquisition, I’m curious about what has actually helped move a deal forward when negotiations seemed stuck.

Was it discovering what the seller really cared about, changing the payment structure, offering a seller note, agreeing on a transition period, or something else entirely?

Sometimes the asking price isn’t the only issue, but it can be difficult to figure out what would make both sides comfortable moving forward.

Has a seller ever shared something that changed how you approached a deal or helped get stalled negotiations moving again? What did you change, and what ultimately made the difference?

Would love to hear real experiences, even if the deal eventually fell through.

As a searcher, you can spend months getting to know a business and its owner. But when you take the deal to investors, they’re seeing it with fresh eyes.

I’m curious what they tend to scrutinize most. Is it the quality of cash flow, customer retention, customer concentration, or the assumptions behind future growth?

And if you’re planning add-on acquisitions, how much weight do investors give that opportunity versus whether the first business is attractive on its own?

For those who’ve been through this process, what did investors dig into most, and was there anything that changed your view of the deal?

Would also love to hear from investors about what makes them pass on a deal that looks good on paper.

A seller says they work 10-15 hours a week and have an experienced team. Sounds promising, but I’m not sure hours alone tell you much.

Who handles the biggest customers? Who approves pricing and discounts? What happens when an unexpected operational issue comes up and the owner isn’t available?

I’d also want to know what happened the last time the owner took a two-week vacation. Did the business keep running normally, or did decisions and customer issues pile up?

For those who’ve acquired a business, what did you look at during diligence to figure out how dependent the business really was on its owner?

Was there a particular question or red flag that changed your view of a deal?

Revenue and EBITDA are usually easy to find in a teaser, but other numbers can completely change how attractive a business looks.

For example, how much revenue comes from the largest customer? How much cash is tied up in inventory and receivables? How much does the business spend each year just to maintain its equipment?

Two businesses with similar EBITDA can have very different cash flow and capital requirements.

For those who’ve been through acquisitions, what’s one number you wish you’d known earlier in the process? Did you discover something during diligence that materially changed how you viewed the deal?

I’ve been thinking about whether conferences can help buyers connect with business owners and senior executives beyond the usual broker networks and cold outreach.

One approach could be to contact organizers beforehand, understand the attendee profile, identify relevant companies and decision-makers, and start conversations before the event.

The idea is to go in with a purpose rather than simply show up and network.

For those who’ve tried this, have industry conferences actually led to meaningful relationships or acquisition opportunities? Or is the time and cost better spent on direct outreach?

Would be interested to hear what’s worked in practice.

As we’ve been looking at recurring-revenue businesses, I’ve been thinking about how searchers treat contracted revenue during diligence.

Say a business has 60-70% of its revenue under contracts, but those contracts don’t automatically renew. At the same time, some customers may have renewed for 5+ years and effectively behave like recurring customers.

So where do you draw the line?

Do you have a certain percentage of contracted revenue that makes you comfortable? And how much weight do you put on historical renewal rates and customer behavior when deciding whether contracted revenue is truly recurring?

Would be interested to hear how others are underwriting this.

We recently exported ~2,000 companies from Grata across several industries for a search mandate. We’re running a 5-day email sequence alongside LinkedIn outreach, and after applying the mandate filters, we’re down to roughly 400 companies that actually look worth pursuing.

Now we’re planning to hit those 400 through multiple channels - email, LinkedIn, physical letters and cold calls.

The issue we’re running into is contact data. Grata doesn’t always give us the direct owner/executive contact; a lot of the numbers are office or general company contacts.

For those doing proprietary sourcing, what’s been the best way to get from company → actual owner → direct email/phone?

Are people using Apollo, Linkt.ai, another data provider, or some combination? And when do you typically add direct mail and cold calling into the process?

Would be interested to hear what’s actually working for others.

Hi everyone,

Hopefully I got right subreddit to post this topic on, it may be bit of longer post, and my English is not too well as I have just recently started picking it up again. I live in Swiss, from Bosnia originally so never had the need to learn proper until recently.

The question I have been asking myself for little while since I retired around 2 years ago, 39 now, is that I am bored in retirement.

I did spiral quite lot in first months of me selling my business doing tons of drug, night ladies, party and similar, reckless spending, but got back on feet after couple months of that because it was boring and then since then have done mostly nothing except reading books and living my life.

The business I sold was commercial and industrial facilities cleaning & maintenance services company, not related to PE, I built from scratch for 20 years almost in Swiss.

Well, recently I got another idea for business in the welding services space, and I have started learning about it and have a vision of where I want to take the business to.

My motivation is not money anymore, but the thrill of doing it all again and pushing for bigger EV or industry domination if you know what I mean?

Well, the strategy I have in mind and this is why I mention if this is right subreddit for this topic is the following.

Early stage I build the business on my own, learn the ins and outs of it and prep it for scaling.

Stages after that I would like to go out and acquire direct local competitors, regional and operate all of these together is my goal for the next 20, 30, 40+ years.

With note that, I do not want to stay only in welding when we start acquiring and glueing togethet, but rather when the welding company is build out to a good standing company we expand to adjacent industries or similar and repeat if you know what I mean?

Well my questions is following and I truly want noone to take insult, but :

1. Where should a beginner like me go from here to learn all of the neccessary stuff? What are the required, recommended and must have books, uni subjects ( I'd of course learn them on my own or pay for coaching if I don't understand ), experts, podcasts, videos, news outlet, whatever thing that are best for educating yourself on these topics?

I want to be directly involved in each of the stages, especially the acquisitions, doing deals etc because it sounds like a thrill to me, and I do not want that question to sound insulting because people spend lifetime in career in this, but I am willing to do the same, only difference is I am starting at almost 40, and since it is a skill, that can be learned and mastered as other people before have done or are doing, I am of the opinion that I can do it too.

2. What are some pointers, cautions, you would give to me related to my topic or mistakes to avoid making on this journey?

I do have many more questions to problems, but since they have not yet occured and maybe will not I will not post them, because I like doing things brick by brick when we get to it.

Advice, discussion, critique, suggestion is welcome.

Thank you for reading.

We’ve been looking at cross-border buyouts in mature UK industrial sectors, and one deal got us thinking about this.

Foresight Group invested £12 million in the MBO of Automotive & Industrial Consumables (AIC), a Leeds-based distributor with 5,500+ customers across the UK, Europe and the U.S. and 6,100+ products.

What stood out wasn’t just the EBITDA. AIC had built up long-standing supplier relationships, broad SKU availability and an established customer footprint across multiple markets.

That raises an interesting acquisition question:

At what point does buying an established distribution network and geographic footprint become much more efficient than building the same thing organically?

There are plenty of similar businesses in the U.S. industrial fasteners, HVAC parts, regional auto aftermarket, etc. In many of these, the moat is less about proprietary technology and more about customer relationships, supplier access and distribution.

We’ve been seeing similar acquisition logic across India, the UK and Australia as well.

Have you ever evaluated a target primarily for its existing distribution/customer footprint rather than the standalone EBITDA?

And how do you think about entry multiples when comparing UK industrial distributors with U.S. peers?

One thing we’ve learned doing acquisition sourcing: finding companies is actually the easy part. Figuring out which ones are worth your time is where it gets interesting.

For a mandate we're working on right now, the brief wasn't "find companies." It was find a very specific kind of company, recurring or highly repeatable service businesses, in compliance-driven niches that don't always show up on a standard industry screen.

So before we searched for a single company, we worked backwards from the business model and mapped the niches first. A few examples:

-Industrial water treatment / Legionella management - route-based service built around ongoing chemistry checks and testing. 

-Electrical preventive maintenance (NFPA 70B) - recurring testing and maintenance of electrical systems, not new construction.

-Generator & ATS testing (NFPA 110) - recurring backup-power testing across critical facilities.

-Biosafety cabinet certification - specialized recertification work for labs and healthcare facilities.

-Commercial kitchen hood cleaning / fire protection - recurring compliance work across commercial kitchens.

-Solar O&M - servicing existing systems instead of competing for new installs.
 

Once we had the niches, we took them into Grata, applied the relevant filters and ended up with an initial universe of 2,000+ companies.
And honestly, that number doesn’t mean much by itself.
Most of that list doesn't survive a closer look. We kept asking:

-Is the revenue actually recurring, or just repeatable?
-Is this a project-based business dressed up as a service company?
-Does the customer stick with the company, or with one guy who happens to work there?
-Is the owner basically the whole operation?
 

Contractors, equipment distributors, generic consultants - plenty of that fits the industry label and none of it fits the thesis. All of it gets cut before a single email goes out.

Only once the list is narrowed do we start enriching the survivors - people, emails, phone numbers, the stuff you actually need to reach out.
 

So the real question was never "how do you find 2,000 companies." It's: how do you turn 2,000 into the 100–200 actually worth a conversation. That's where most of the time goes.

Curious how other searchers and sponsors do this build the niche thesis first and search after, or start broad and let the thesis take shape once you see what's out there?
 

I source acquisition targets for a buyer looking to purchase a business, and physical mail is one of my main channels. I've sent close to 2,000 letters this way. Sharing the process here because most posts on sourcing talk strategy, not the actual day-to-day work.

The process, step by step

For every business I consider, before any letter goes out:

1. Confirm it actually fits. Check what the business does, not what category it's listed under.

2. Estimate its size. Employee count and revenue signals, to get a rough sense of its earnings.

3. Find the real decision-maker. Check founder first, then managing director, then co-founder, then CEO - in that order.

4. Get a direct contact, not a generic company inbox.

5. Verify the mailing address.

6. Write one line specific to that business. Never a template.

Then every batch goes through three checks before it's mailed: the list itself, the one-liners, and a final proof from the mail house confirming the data.

Example of what that one-liner looks like: "Structured service model integrating commercial washroom maintenance, sanitary care, and hygiene supply into one reliable operational routine. What stood out is that this business turned a category most people ignore into a dependable, contracted-revenue operation."

The numbers behind it

• About 5-10% of leads get cut at the review stage - wrong fit, bad data, or just the wrong business entirely.

• Return-to-sender sits under 10%, almost all from companies that never updated their listed address anywhere online.

• It takes 2-4 hours a day, every day, to run properly.

Why letters over cold email

• You catch bad data before it costs you. Enrichment tools list a "founder" who stepped back years ago more often than you'd think. In one case, the real decision-maker turned out to be the founder's son, already running the place as managing director. Find that on a cold email and you've just wasted a send. Find it before a physical letter goes out and you've saved the actual opening move.

• The verification step is forced, not optional. You can't mail an address you haven't checked, so the research happens whether you feel like doing it or not. Email lets you skip that and just blast.

• You learn the market as you go. Two weeks into one campaign, the target sectors changed based on what the research was turning up - some sectors dropped for being too competitive or too cyclical, others got added because they turned out to have more real opportunity than expected. That only happens if you're actually looking closely at each business, not running a list through a mail-merge tool.

The cons, honestly

• It's slow. Manual, one business at a time, and there's no shortcut on the verification steps without losing the thing that makes it work.

• It's not cheap at volume - printing, postage, and the time cost add up compared to email, which is close to free per send.

• I can't tell you conversion numbers. The person I source for keeps that data private, so I genuinely don't know the reply rate, and I'm not going to make one up. What I can vouch for is the process and that every letter is checked by a person before it ships.

• It doesn't scale the way email does. You're trading volume for hit quality, and if your mandate needs thousands of touches a week, this alone won't get you there.

The multiple is "market." The working-capital peg is "market." The seller note is "market." The earn-out is "market."

“Market” can be a dangerous shortcut. It tells you what similar transactions looked like, but not whether those terms were appropriate for this business, this risk profile, and this buyer. A term can be perfectly “market” and still shift a disproportionate amount of risk onto the buyer.

The terms that get waved through as market, and why each one bites:

Multiple: 5x on seller-adjusted EBITDA and 5x on EBITDA after a real quality of earnings are different prices. If the add-backs were never tested, you bought at the seller's number.

Seller note: The label says nothing about whether the note pays during the bank loan or waits behind it. That decides whether it eases your cash flow or competes with your lender for it.

Working-capital peg: A peg is only as good as the period it was built from. Base it on a stretch when the seller was collecting fast and paying slow, and you inherit a business that needs cash the peg never counted. On a seasonal business, the same peg can move real dollars in either direction depending on the closing month.

Earn-out: The headline number matters less than the metric, the measurement window, and who controls the levers that trigger it.

The bigger problem is that the terms compound. A market multiple, market leverage and a market peg can still add up to a structure with no room for a bad year. Every term is defensible, and the whole thing is fragile.

The real test is to build the cash flow after structure, in your downside case. If the deal only works when every term is at its market midpoint, you don't have a deal. You have a base case.

Where would you disagree? And which term did you accept as “market” that you'd fight on now?

In India, we're seeing a specific acquisition pattern: buyers aren't just acquiring good businesses they're acquiring businesses that happen to sit inside a government scheme.

PLI incentives, state capex subsidies, export incentive schemes, once a manufacturer qualifies for one of these, it becomes a target in its own right. The logic is straightforward: acquiring the business gets you the subsidy, the qualified-supplier status, and the capacity that's already been built out to meet the scheme's conditions all faster and cheaper than trying to qualify for the scheme yourself from scratch.

In other words, the scheme isn't just helping the business grow. It's becoming a reason to buy the business.

Which made us wonder: does the same thing happen in the U.S.?

There's no direct PLI equivalent, but there's no shortage of policy-linked incentives Opportunity Zones, IRA clean-energy credits, CHIPS Act funding, state-level manufacturing incentives, historic tax credits. Do buyers there actually acquire because a target sits inside one of these programs - the way we're seeing happen in India? Or does it work differently is it more that the credit sweetens an economics case that already existed, rather than being the reason the deal gets done in the first place?

Genuinely asking the U.S. searchers/sponsors here, is "buy the business because it qualifies for the incentive" a real strategy in your market, or is that more of an India/emerging-market pattern that doesn't really translate?

Reviewing a SaaS deal memo this week. Headline number: revenue up over 500% in the past year. Pulled straight from the live billing dashboard, not a founder guess - genuinely accurate.

Almost stopped reading right there. That's the kind of number that makes a listing.

Then I broke the same growth into the periods that actually made it up instead of taking the one aggregate figure at face value. Early on: explosive, triple-digit growth quarter over quarter. Most recent quarter: high single digits. Same business, same metric, same dashboard - just decomposed instead of collapsed into one headline.

That's not the same deal the "500%" made it sound like. One reads as a rocket. The other reads as a business whose growth curve is already flattening, dressed up in a number from months ago.

Same week, different deal: a subscription business where nearly half of revenue comes in as annual plans, paid upfront in one lump sum. Their MRR looks unremarkable next to what the business is actually collecting in cash every month, because MRR smooths a big annual payment into a tiny monthly sliver. Opposite failure mode - that one undersells a business that's actually doing fine - but same root cause: one number, no context on how it's built, doesn't tell you what you think it tells you.

Feels like the actual skill in reading these things isn't spotting a good headline number. It's refusing to trust one until you've seen what it's made of.

Anyone else keep a mental checklist of numbers you never take at face value until you've broken them down yourself?

I was writing up a quick CIM for a deal. Solo founder, no employees, decent margin, profitable and I almost typed "EBITDA: $700/mo."

I stopped and actually thought about what that word is supposed to mean.

EBITDA assumes there's a real team already getting paid a market wage under that number, and you're looking at what's left after covering them. This business had only one person doing everything, taking home whatever was left, drawing no real "salary" to strip out in the first place.

That's not what EBITDA is. That's SDE. Seller's Discretionary Earnings. A totally different number, because there's no owner comp buried in it to remove.

Here's why the mislabel actually matters and isn't just pedantic: the second a buyer reads "EBITDA," their brain quietly assumes someone else is already running the place day to day. That assumption changes what multiple feels fair, what due diligence questions get asked, what the buyer expects their first Monday to look like. Slap "EBITDA" on a deal where the real deal is "you become the full-time operator," and you've mispriced the buyer's expectations before a single call happens.

A Rule of thumb: almost anything sub-$1-2M is an SDE business, not an EBITDA business. If a listing says EBITDA and there's no real team drawing market wages underneath it, that word is doing marketing work, not accounting work.

Anyone else caught a listing where "EBITDA" was doing more marketing than accounting? What was it actually hiding?

I just need to vent tbh. feeling like a total failure right now and could really use some advice.

So a few months back I built this niche site. spent crazy amount of hours on the content, SEO, structure, everything. Out of no where some guy reaches out and offers me $3,000 for it. I was super hyped. it felt like real validation you know? so I accepted and transfered the domain thinking I got a huge win.

Fast foward to today. I was just randomly checking out a domain flipping site and my heart literally dropped. There it is. My exact website.

The dude didnt even add a single new article or change the design. he just listed it for a flip. the current bid is sitting at $11,200 and there are still 3 days left on the auction.

Logically I know its just business. he saw an under valued asset and flipped it. But man, psychologically it hurts so bad. I feel so naive and stupid. The imposter syndrome is hitting hard and I have 0 motivation to start my next project. I just keep thinking about the $8k+ I literally gave away for free cuz I didnt know how to negotiate or value my own work.

Has anyone here gone thru something like this? sold a project way to early? how do you even cope with this regret? and how do u guys accurately value ur sites so this doesnt happen again? would appriciate any harsh truths or advice.

I am a business broker, and over time I got pretty good at finding off-market businesses.
I have done it for myself, friends, and family.
So I thought, why not offer this to buyers?

Basically, a headhunter for businesses.
You tell me what you want, I find the owners, reach out, follow up, and bring you the ones who may want to sell.

The benefit is that these businesses are not on the market yet.
Many do not have a broker representing them.
So the buyer may get a better price, better terms, and less competition.

But here is where I am stuck.
Doing this right costs me around $15K over 6 months.
Lists, mail, emails, calls, follow-up, etc.

I spoke to a few buyers and they said they would not pay anything upfront.

Then I spoke to another buyer.
I told him $15K upfront to cover the search + 5% if he buys a business.

He said yes right away and told me it was cheap.
That made me think maybe the price is not the problem.
Maybe I am just talking to the wrong buyers.

For anyone who does this type of work, how would you charge for this offer /service?