Something shifted in the lower middle market financing landscape over the past three years that most business owners have not noticed: private credit funds have displaced traditional bank debt in a meaningful number of acquisition transactions. The implications for sellers are real. Private credit lenders operate differently from banks. They move faster, are more flexible…
When a buyer offers you $12M and their capital stack includes something called “mezzanine financing” or “subordinated debt,” here is what that means for you as the seller: a specialized lender is providing the buyer with capital that sits between the bank loan and the buyer’s own equity. It is more expensive than bank debt,…
If you sell your business for $8M and receive all $8M at closing, you recognize the entire capital gain in a single tax year. At a combined federal rate of approximately 23.8%, you could owe roughly $1.9M in federal taxes on the gain, all due on April 15 of the following year. If you sell…
If your business has more than one owner and you do not have a funded buy-sell agreement, you have a problem that does not feel like a problem yet. It will feel like one the morning something happens to one of you. A buy-sell agreement is a contract between co-owners that specifies what happens to…
Distribution businesses sit in an interesting position in the M&A market. They are not as sexy as technology companies or healthcare services firms. They do not get written about in industry press with the same breathlessness. But they are the connective tissue of the economy, the companies that move products from manufacturers to customers, and…
There is a meaningful difference between what your business is worth on paper and what a buyer will pay for it in a transaction. An accountant will tell you your book value. An appraiser will tell you a range based on financial formulas and comparable transactions. A buyer will tell you what they are willing…
Manufacturing companies are some of the most valuable and most misunderstood businesses in the lower middle market. Valuable because they produce physical products with defensible competitive positions, generate strong cash flows, and attract both PE and strategic buyers who understand the sector deeply. Misunderstood because the valuation methodology, due diligence requirements, and buyer evaluation criteria…
Professional services firms are both the easiest and hardest businesses to sell in the lower middle market. Easy because they are asset-light, capital-efficient, and generate strong margins when run well. Hard because the asset is people, and people can walk out the door the day after the deal closes. The fundamental question every buyer asks…
The deal closes. The wire hits. The papers are signed. And then the question that has been sitting underneath every conversation for the last nine months surfaces in full force: what happens now? For the seller, this moment is the collision of two realities. On one side, the financial outcome you worked toward. On the…
The PE firm offers you $20M for your business. But the structure is not $20M in cash. It is $15M cash at close and $5M in “rollover equity,” which means you retain a 25% ownership stake in the business after the acquisition. The PE firm’s pitch: hold that 25% stake for 3-5 years while they…