Should I Sell My Business to Private Equity?

How private equity buys companies

A private equity firm raises money from investors, buys companies, works to grow their profits, and sells them again, usually within several years. In the lower middle market, much of that activity happens through buy-and-build:

1. The firm buys a larger platform company in an industry.
2. It then buys smaller add-on companies and merges them into the platform.
3. The combined company is sold later at a higher multiple than the firm paid for the pieces.

If you own a small or mid-size company, you will most likely be approached as an add-on.

Is private equity buying businesses like yours?

According to CT Acquisitions’ 2026 buyer mandate report, the lower middle market is the most active it has been in a decade, with more than 500 active acquirers. Capstone Partners reports that financial buyers have been outbidding strategic buyers on average EBITDA multiples to win deals and put their capital to work.

The sectors most active for add-ons in 2026 include HVAC, plumbing, dental, pest control, fire and life safety, and IT managed services.

What a private equity offer looks like

Term	Typical for an add-on deal
Target size	$500K–$10M EBITDA
Price	3–7× EBITDA
Payment	Mostly cash at close, plus 10–30% rollover equity
Timeline	Often 60–120 days to close
Your role after	Usually kept on for a transition period

Source: CT Acquisitions, 2026 Lower Middle Market Buyer Mandate Report.

Rollover equity: the second payday

Instead of taking the full price in cash, you roll part of it into a stake in the combined company. If the firm grows the platform and sells it at a higher multiple, your stake can be worth more than the cash you set aside. If the platform struggles, it can be worth less. It’s real upside, and real risk.

Earnouts

Some offers tie part of the price to future performance, paid only if the business hits revenue or profit targets after the sale. Earnouts close valuation gaps, but they depend on targets you no longer fully control. Read the definitions closely.

Private equity vs. other buyers

	Private equity	Competitor or strategic buyer	Individual buyer
Typical size	$500K+ EBITDA	Any	Under about $1M SDE
Price	Often highest for qualifying companies	Can be high if there are cost savings	Usually lower; often uses SBA financing
Your role after	Transition period, sometimes longer	Often short	Short handover
Second payday	Possible through rollover	Rare	Rare
Your team and brand	Usually kept, with new systems	Often merged into theirs	Usually kept

Own an accounting firm? See selling your CPA firm to private equity for how these deals work in the profession.

Questions to ask any private equity buyer

1. How many add-ons have you completed, and can I speak to two of those sellers?
2. How much of the price is cash at close, how much is rollover, and how much is earnout?
3. What role do you expect me to play, and for how long?
4. What happens to my employees, benefits and brand?
5. When do you expect to sell the platform, and how would my rollover be valued then?

The honest trade-off

Private equity can pay well, move quickly and offer a second payday. In return, you give up control, take on a board and reporting duties, and tie part of your outcome to someone else’s plan. Owners who want a clean exit often prefer a competitor or individual buyer. Owners who want upside and are willing to stay on for a few years often prefer private equity.