When considering a rollup strategy, structuring equity and control effectively can be the difference between a successful acquisition and a failed one. In this blog post, I’ll break down a proven framework for equity distribution, seller retention, and the formation of a platform company based on real-world experience. What is a Rollup Strategy? A rollup strategy involves acquiring multiple businesses within the same industry and integrating them under a single platform company to increase efficiency and market value. The goal is to create operational synergies, streamline processes, and ultimately drive a higher exit valuation for all involved parties. Structuring Equity in a Rollup One of the most common questions I receive is: “How much equity should the seller retain after an acquisition?” The key to effective equity structuring lies in balancing control while keeping the seller engaged for future growth. Here’s how I typically approach it: Key Insight: Acquiring control upfront allows you to lead strategic decisions while retaining a motivated seller who has a vested interest in the company’s long-term success. The Role of a Platform Company in a Rollup A platform company serves as the foundation for future acquisitions and integrations. Here’s how it works: Pro Tip: Even before the deal closes, positioning the acquired company as the platform company strengthens your acquisition narrative and simplifies future negotiations. Communicating Day-One Changes with Sellers A common concern from sellers is how their business will operate post-acquisition. To ease these concerns, I emphasize continuity while establishing a long-term growth plan: By positioning the acquisition as a partnership for growth rather than a hostile takeover, sellers often feel more comfortable staying involved and supporting the rollup vision. Key Takeaways for a Successful Rollup Strategy Final Thoughts A successful rollup strategy is all about balance—controlling the deal while keeping sellers engaged for

When approaching a business acquisition, addressing seller objections is often the key to moving the deal forward. Sellers may have concerns about financing, risk, or their future involvement, but effective strategies can turn these objections into opportunities. Here, I’ll walk you through how to navigate common hurdles, build trust, and close deals successfully. Identifying and Addressing Seller Objections Understand Seller MotivationThe first step in negotiations is determining if the seller is truly motivated. Sometimes, sellers appear hesitant, stating they’re only interested in upfront payments. In such cases, directly addressing their motivations can be enlightening. For example, saying, “It doesn’t seem like you’re ready to sell,” may prompt them to articulate why they need to move forward. This allows them to convince themselves, which is often more effective than you doing the persuading. Dealing with Financing and Seller ObjectionsSeller financing is a common sticking point. To reassure the seller, focus on the low likelihood of default and emphasize protections in place. Highlight that, in a worst-case scenario, they would regain ownership of an improved business, along with any payments made up to that point. Offering regular financial reports or setting performance covenants can further build trust. Exploring Creative SolutionsTo alleviate risk, consider offering: Building Trust and Confidence One effective tactic is reframing the seller’s focus. Instead of dwelling on the potential negatives, outline how the agreement benefits them: Final Thoughts Business acquisitions are as much about trust and relationships as they are about numbers. By proactively addressing seller concerns and offering creative solutions, you can move closer to a win-win outcome. Whether it’s negotiating seller financing, structuring performance incentives, or leveraging third-party services, the key is showing the seller that their concerns are heard and addressed. Key Takeaways on Overcoming Seller Objections Handling seller objections with empathy and creativity is essential

Negotiating the acquisition of a business requires a balance of strategy and finesse. One approach I use consistently is an invaluable private equity hack to anchor discussions around industry standards. Here’s how I navigate conversations with sellers to set reasonable expectations and ultimately secure favorable deals. 1. Begin with Industry Standards The first step is to establish a baseline by referencing industry standards for valuation. For example, if businesses in a particular sector typically sell for 2x to 3x their profit, I make sure to present that as a benchmark during the conversation. By anchoring expectations to an objective measure, you establish credibility and shift the discussion away from inflated or emotional valuations. 2. Dive into Due Diligence Once I’ve set the industry standard as the baseline, due diligence becomes my tool for negotiating downward. As I dig into the details, I often uncover challenges that justify lowering the valuation—whether it’s operational inefficiencies, outdated processes, or unmet growth targets. These findings create a natural pathway to adjust the price while keeping the conversation rooted in the data. 3. Starting Low with the Anchor When dealing with sellers who haven’t expressed a specific valuation, I like to establish a low anchor. I’ll often say something like, “Deals like this typically sell between 1x and 1.5x profit.” This approach ensures I’m starting at a place where I’m comfortable negotiating upwards if necessary. Interestingly, many sellers have accepted this range without objection. It’s important to remain flexible, but starting low creates room for movement while anchoring expectations in your favor. 4. Responding to “Pie-in-the-Sky” Expectations If a seller begins the conversation with an overly ambitious valuation, my strategy shifts. In these cases, I still reference industry standards to gently bring them down to a more reasonable range. For example, I might say, “While