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 structuring business rollup negotiations, mastering the art of strategic conversations can make the difference between closing a successful deal or facing objections. It’s about more than just presenting terms—it’s about guiding the other party toward a shared vision where they feel engaged and aligned with the outcome. Define the Outcome First Before entering business rollup negotiations or conversations, it’s essential to define your desired outcome. Ask yourself: For example, if your goal is to secure a seller’s involvement in a rollup with a 30% equity stake, build your conversation around that goal from the outset. Then, reverse-engineer your questions to gradually lead the seller toward embracing that vision. Ask Strategic Questions to Uncover Motivation Rather than stating your offer upfront, ask guiding questions that encourage the other party to reveal their own motivations. This approach builds trust and helps the seller convince themselves of the value of the deal. Sample Questions: By inviting them to share, you gain insights into their goals while subtly steering the conversation toward your desired outcome. Presenting a Term Sheet the Right Way Once you’ve identified motivations and established alignment, the next step is guiding the conversation toward a formal offer. Rather than presenting the term sheet as a final, unchangeable document, build it collaboratively. Key Tip: Develop a draft term sheet in advance that reflects the outcomes you’re aiming for, then ask targeted questions to encourage agreement on the key points. This allows the other party to feel they’re part of the decision-making process rather than having terms imposed on them. Engage Stakeholders with Inclusion When multiple stakeholders are involved, such as a business owner and their heirs, ensure you equally engage all parties. Dividing attention equally helps build rapport and ensures no one feels left out. Pro Tip: If a less vocal

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