31 Jul Built to Sell: 4 Types of Buyers Circling Your Business, and the One Now Doing 28% of Deals
There are four types of financial buyers who might make an offer on your business, and more often than any other type, the one approaching you is an independent sponsor. It is an unhelpful label for a group that raises the money for a deal only after the seller has signed an LOI, which is also when the seller’s leverage is at its lowest.
Travis Jamison runs Capital Pad, where investors fund independent sponsor deals. He sees dozens of them for every one he approves. Independent sponsors are now behind roughly 28% of lower middle market acquisitions, which is more than traditional private equity does.
In this episode of Built to Sell Radio, you discover how to:
– Tell which of the four types of financial buyers is behind an anonymous email
– Spot a seller note written to disappear if the business misses its numbers after closing
– Read a buyer’s investment thesis as a signal of whether they can actually close
– Judge how much protection you get when a buyer borrows half the purchase price instead of ninety percent
– Position a company as the platform in a roll-up rather than the tuck-in, where the spread runs two to four turns of EBITDA
– Recognize the point in a process where a founder’s identity, not the numbers, kills the deal
– Prepare for the moment an owner is handed an employment agreement for the first time
