Should you sell to a private equity platform or build your own?

What do you get if you sell to a private equity platform?

• Mostly cash. In the IBBA's Q2 2026 data, sellers across all buyer types, not only private equity, received 83–92% of deal value in cash at close.
• An add-on price. Private equity platforms usually buy smaller companies as add-ons. PKF O'Connor Davies tracked 25 HVAC deals in the first half of 2026; 14 were private equity add-ons and 3 were private equity platforms. You are paid for your company, not for the platform's multiple.
• Sometimes rollover equity. You may keep a slice in the platform, which pays again if the platform sells for more later.
• Sometimes an earnout. In general M&A, earnouts are commonly 10–30% of value in the lower middle market, and only 63% pay in full.
• A defined end. You usually stay for a transition period, then leave.

What does building your own platform take?

Building means you become the buyer. It needs all four levers working:

• Capital. SBA loans for Business Expansions cap at $5M per borrower including affiliates, and owners of 20% or more give personal guarantees. Beyond that you need equity, seller financing or stock.
• Talent. Managers who run the companies, and a controller or CFO who consolidates the books.
• Opportunities. A steady flow of owners willing to sell to you rather than to a better-funded buyer.
• Acquisitions. The discipline to price, close and integrate one deal before the next.

It also takes years. The founder in our best client outcome, which was not a typical one, made three acquisitions over seven years. One failed and was closed. The founder sold the original business, moved to Nasdaq and sold the company for $240M in cash.

How can you compete with private equity for deals?

Private equity often has cheaper capital and will pay more for an add-on than you should. Don't try to win on price. Compete on what you can offer that a fund cannot.

1. A different currency. Offer equity in your holding company, so the seller shares in the platform's future value. A seller note can bridge part of the price.
2. Public stock, at scale. A study of 6,000+ IPO registrations found that going public raised a firm's annual probability of making an acquisition by about 12 percentage points. About three-quarters of the extra deals were at least partly paid in stock. Stock-paid deals also underperformed cash deals by 20–30 percentage points over 3–5 years, so it is a currency with a cost.
3. Fit. Some owners care who runs the company next, and whether staff and the brand stay. A local operator can make credible promises on both.
4. Certainty. Capital raised before you find the deal lets you close on the timeline you promised. That is why I advise raising before the first LOI, not after.

Worked example: sell now or build

Assume you own an HVAC company with $1M of EBITDA and revenue in the $3–10M band, where practitioner estimates put multiples at 5–8x. The build case uses three add-ons that add $640,000 of net EBITDA for $3.672M, fully debt-financed. The 6x sale multiple is an assumption.

1. Sell now at 6x:$6M. If 85% is paid in cash at close, within the IBBA's 83–92% range, that is $5.1M of cash at close.
2. Build: combined EBITDA is $1M + $640,000 = $1.64M. Debt taken on: $3.672M.
3. Build, valued at 8x:$13.12M − $3.672M of debt = $9.448M of equity.
4. Build, valued at 6x:$9.84M − $3.672M = $6.168M, about the same as selling now, after years of work and personal guarantees.
5. Build, valued at 5x:$8.2M − $3.672M = $4.528M, less than selling now.

This ignores debt paydown and organic growth, which help the build case, and integration costs, which hurt it. The lesson: building pays only if the platform really earns a higher multiple. If it doesn't, selling was the better trade.

Which path fits you?

Sell if you want to retire or step back soon, you have no management team below you, or your personal finances can't carry more guarantees.

Build if you have managers who already run the business day to day, monthly financials you trust, capital you can raise, and the appetite to spend years doing deals.

Consider a middle path if you want some of both: sell with rollover equity, or merge into another owner's holding company for a mix of cash and stock.

Where these numbers come from: IBBA Market Pulse Q2 2026; HVAC practitioner estimates from Beancount; PKF O'Connor Davies; earnout data (SRS Acquiom) via Livmo; SBA limits via Cantrell Law; stock-as-currency findings from the CLS Blue Sky Blog.

Related questions

Can I build first and sell to private equity later?

Yes. A platform with clean books and real management can be sold to a larger buyer at a platform multiple. The risk is that you take on debt and guarantees in the years in between.

Will private equity pay more than an individual buyer?

Often, because the add-on buyer expects savings from combining your company with its platform. It still pays you an add-on price, well below its own platform multiple.

Do I need to go public to compete with private equity?

No. Most holding companies should stay private. Going public fits only companies with real earnings, books an auditor can work with and a steady acquisition program. See should a holding company go public?

What comes next

If you decide to build, your edge over private equity is the currency you offer sellers. Next, read how do you pay a seller with stock instead of cash?

Related articles

• What's the multiple difference between an add-on and a platform?
• Which industries work for small business roll-ups?
• What is multiple arbitrage and how do roll-ups create value?
• 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.