How do you raise capital for a holding company before the first acquisition?

What are investors buying before there is a deal?

They are buying a share of a company that does not yet own anything. So they are judging you, your plan and their terms. A specific business comes later.

A credible pre-deal raise usually rests on five things:

• A thesis. Which industry, why it is fragmented, and why a platform in it should be worth more than the businesses inside it.
• A buy box. Size, earnings, geography and owner situation of the businesses you will buy.
• A capital stack per deal. How much will come from senior debt, seller notes and holding-company equity.
• Governance. Who decides on each acquisition, what investors see, and how often.
• A liquidity path. How investors get money back if you never sell: distributions, buybacks, refinancing or a listing.

The value case is the one the whole site rests on. Acquired profit bought at a lower multiple is worth more inside a platform valued at a higher one. On the site's illustrative math, a business earning $1M a year bought at 4x costs $4M. Inside a platform valued at 10x, that profit supports $10M of value before growth. Real multiples vary, and overpaying or failing to integrate destroys that value. Investors should hear both halves.

How much should the first raise be?

Build the number from uses of cash, not from what you hope investors will give. The main uses are the equity in the first deal, the costs of closing it, and the cost of running the holding company until it owns cash flow.

The SBA rules set the floor for the first deal. As of October 2026, under SOP 50 10 8.1, an Initial Acquisition needs an equity injection of at least 10% of total project costs. Total project costs mean purchase price plus working capital, fees and closing costs. For an Initial Acquisition the lender cannot reduce it.

Two rules shape who can supply that injection:

• "Limited sources" together may supply no more than half of the required injection. These are a seller note on full standby for the life of the SBA loan, other standby debt, and passive minority investors who together hold under 20% with no control.
• If minority-investor equity counts toward the injection, those investors generally get only tax distributions until the SBA loan is repaid. Tell investors this before they commit.

Lenders also look at who owns the borrower. Owners of 20% or more must personally guarantee the loan, and trusts must guarantee at any ownership level. Ask your lender how it counts investors who own the borrower indirectly through the holding company.

Worked example: sizing a raise for one deal

1. Total project cost, including working capital, fees and closing costs: $2.5M.
2. Minimum equity injection at 10%: $2.5M x 10% = $250,000.
3. Most that limited sources can supply: $250,000 x 50% = $125,000. The other $125,000 must come from you or from investors who are not limited sources.
4. Deal costs at the roughly 2% of price found in a survey of buyers: about 2% x $2.5M = $50,000 for legal, quality of earnings and related work. Treat this as a rough guide; the survey's median deal was about $4M.
5. Minimum raise for one deal before the holding company's own running costs: $250,000 + $50,000 = $300,000. For two deals of this size, about $600,000.

Compare that with a traditional search fund. Its investors typically fund a search budget of about $400K to $600K before any deal, and get a step-up, often 150%, into the acquisition. A holding-company raise covers different uses, but investors will measure you against that model.

Which securities rules apply?

Selling shares in your holding company is a securities offering. In the US, a private company usually relies on an exemption from registration. The common ones are:

• Regulation D, Rule 506(b). No general advertising. Investors are mostly accredited, and you typically raise from people you already know.
• Regulation D, Rule 506(c). General advertising is allowed. Every investor must be accredited, and you must take steps to verify it.
• Regulation Crowdfunding. Raised online through a registered portal, from the public, with disclosure requirements and annual limits.

Each exemption has conditions, filings and state-law requirements. Paying anyone a commission for bringing in investors raises its own legal questions. Use securities counsel before you speak to a single investor about terms. I have prepared more than 30 private placements and 3 Reg CF offerings. Counsel belongs at the start of a raise, not the end.

Meraki Partners is not a broker-dealer and does not solicit investors or take compensation based on capital raised.

If you are buying your first business

Your first investors are most likely people who know you. They will ask what you have run, what you have bought and what you will put in yourself. Put your own cash in. The SBA limit on limited sources means passive minority money cannot carry the whole injection anyway.

Keep the first raise small enough to close and large enough for the first deal plus reserves. A raise that fails to close leaves you with an LOI and no equity.

If you already own a business

You have an advantage. A business you have owned for a while gives investors a record to judge. Buying a second business through the one you own can fall in the SBA's Business Expansion category. There, as of October 2026, the lender may reduce or waive the injection if you show strong liquidity and positive net worth, and the coverage test is 1.15x rather than 1.25x. Lenders typically look for the same or a related industry and two full fiscal years under current ownership.

That can lower the cash needed per deal, which changes what the raise is for. Equity then funds the acquisition program, the team and reserves, not just down payments. The Holding Company Playbook is built to produce this written plan, with the capital lever set out for your situation.

Where these numbers come from: SBA equity injection, limited-sources, guarantee, Business Expansion and coverage rules are from SOP 50 10 8.1 as summarized by Cantrell Firm and Beancount. Deal costs of about 2% of price are from a survey of buyers' deal costs. Search budget and step-up figures are from Long Angle. The $4M-to-$10M example is the site's illustrative math, not a forecast. SOP 50 10 8.1 applies to loans numbered on or after October 1, 2026; lender practice under it is still settling and these are secondary summaries, so confirm current terms with your SBA lender.

Related questions

Can I raise money before I have a deal?

Yes, but it is harder than raising for a signed deal. Investors are backing you and the plan, so the written thesis, buy box and governance carry the weight a business's financials would otherwise carry. Expect smaller checks and more questions.

Do my holding-company investors have to sign the SBA guarantee?

Owners of 20% or more of the borrower must personally guarantee an SBA loan, and trusts must guarantee at any percentage. Passive investors below that line usually do not. Confirm with your lender how it looks through the holding company.

Should I raise for one deal or for a program?

Raise for at least the first deal plus reserves, and tell investors how later deals will be funded. A holding company that has to start a new raise for every deal loses speed with sellers.

Can I use Regulation Crowdfunding for a holding company?

It is possible, through a registered funding portal and with the required disclosure. It brings many small investors onto your cap table, which has costs and benefits. Discuss it with securities counsel against Regulation D.

What comes next

Once you know how much you need, the next question is whose money it should be: family office, private equity or your own network.

Related articles

• Family office, private equity or your own network: who should fund your holding company?
• Fund, holding company or deal-by-deal SPVs: how should you raise?
• When should you raise capital: before or after you find a deal?
• How do investors in a holding company get liquidity if you never sell?
• How do you build a holding company for acquisitions?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.