Guides for
These guides answer the questions founders and owners ask before they sell to private equity or bring in a partner: how the process works, how companies are valued, what rollover equity and earnouts mean, and how to prepare. Each one links its sources.
Start here
- How to sell your business to private equitySelling to private equity means a firm buys most of your company, usually with a mix of cash at close and equity you keep. You work through an intro call, a data request, a letter of intent, diligence and a close. Most owners stay on and invest alongside the buyer.
- Recapitalization: take cash out and keep a stake in what comes nextA recapitalization is a partial sale. An investor buys part of your company, you take cash out, and you keep the rest of your equity. In a majority recap the investor takes control. In a minority recap you keep control and sell a smaller stake.
- Business Succession and Exit Options: How to Choose the Right Next Step for Your CompanyOwners have five main exit paths: transfer to family, sell to management, sell to employees through an ESOP, sell to a strategic buyer, or partner with private equity. Each trades price, speed, control and legacy differently. Start planning at least three to five years before you want to step back.
- Buy and Build Strategy: How a Platform Company Grows Through Add-On AcquisitionsA buy and build strategy starts with one well-run platform company and adds smaller businesses to it over time. The goal is a larger, more capable company than any single piece could be. It fits fragmented industries best. Owners of smaller firms can sell to a platform and often stay on.
- Capstreet deal criteria: the companies we look forCapstreet looks for entrepreneur-owned business services companies with $3 to $15 million of EBITDA. We make primarily majority investments, and entrepreneurs reinvest alongside Capstreet. We want a tenured team, solid financials, a defensive business model, untapped growth potential and a niche advantage. We invest across 12 industries.
- Lower middle market private equity: what owners should knowLower middle market private equity means investing in smaller private companies, often founder-owned, with a few million dollars in earnings. Firms buy a stake, add management and capital, and grow the business. Definitions of the market vary by firm. Capstreet looks for companies with $3 to $15 million of EBITDA.
Compare your options
- Private equity vs strategic buyer: which one should buy your business?A strategic buyer is an operating company that buys for synergies and often pays more cash up front. A private equity firm is a financial buyer that backs you to grow and usually asks you to roll over equity. Choose a strategic sale for a clean exit. Choose private equity to keep building.
- Private equity vs management buyout: how to choose between themIn a management buyout, your own managers buy the company, usually with bank debt and sometimes private equity. In a private equity sale, a firm buys it and backs growth. An MBO keeps the business in familiar hands but often pays less cash at close and adds financing risk.
- Majority vs minority recapitalization: how much control do you give up?In a majority recapitalization you sell 51% or more, take more cash and share control with the investor. In a minority recapitalization you sell about 20% to 49%, take less cash and keep control. The choice comes down to how much control you give up for how much cash today.
- Growth equity vs buyout: which type of investor fits your company?Growth equity usually buys a minority stake with little debt to fund expansion, and you keep control. A buyout usually buys a majority or all of the company, often with debt, and the buyer takes control. Growth equity suits a proven company that needs capital. A buyout suits an owner seeking liquidity and a hands-on partner.
Deep dives
- Rollover equity: what it is, how it works and what to ask before you agreeRollover equity means you take part of your sale price as an ownership stake in the new company instead of cash. You get less cash at closing. You keep a share of the upside if the company grows and the buyer sells it later. That later payout is not guaranteed.
- Earnouts: how they work, how long they last and how to protect your payoutAn earnout is extra purchase price you receive after closing only if the company hits agreed targets during a set period. Most last one to three years, and the median outside life sciences is 24 months. Earnouts bridge price gaps but cause disputes, so the contract details matter.
- The letter of intent: what it says, what binds you and what to negotiateA letter of intent (LOI) is a short document where a buyer states the price and main terms it proposes. Most terms are non-binding. A few, usually exclusivity and confidentiality, do bind you. Signing starts diligence and takes your company off the market, so negotiate it with a lawyer.
- Quality of earnings: what a QoE report checks and how to prepare for oneA quality of earnings (QoE) report is an independent review of your financials that tests whether your reported profit is real, repeatable and backed by cash. Buyers use it to decide which earnings they will pay for. A clean QoE protects your price and speeds up diligence.
- EBITDA multiples in the lower middle market: what buyers paid and why prices differIn the first nine months of 2025, GF Data reported private equity buyers paying an average of 6.4x EBITDA for deals with enterprise value of $10 million to $25 million, and 6.8x for $25 million to $50 million. Averages hide wide gaps. Earnings quality, customers and management move your multiple.
- How to prepare your company for a private equity sale: a 12 to 24 month planStart 12 to 24 months before you plan to sell. Clean up your financials, support every add-back, build a team that can run without you, spread your customer base and organize your records. Buyers pay more for earnings they can verify and a business that does not depend on one person.
- The due diligence checklist for owners selling to private equityDue diligence is the buyer's check of your business after you sign a letter of intent. Private equity firms review five areas: financial (quality of earnings), operations, tax, HR and benefits, and legal. Owners who gather clean records before the process starts shorten it and face fewer surprises.
- How private equity values a businessPrivate equity firms usually value a business as a multiple of adjusted EBITDA. They start with your profit, remove one-time and owner-related costs, then apply a multiple based on your size, industry, customers and growth. The multiple moves most with revenue quality, owner dependence and management depth.
- What to expect after you sell your business to private equityAfter a private equity sale, you usually stay on as CEO or in a defined role, answer to a board, report monthly and set goals with new partners. Your rolled equity rides on the next sale. Most surprises come from unspoken expectations, so settle your role, authority and plans for your team before closing.
- How to choose a private equity partner for your businessChoose a private equity partner on fit, not only price. Compare how much you get in cash, what role you keep, how the firm treats your team, how it uses debt, and what past founders say. Ask for references from founders who sold to the firm, and ask your lawyer to review the terms.
- Working with an investment banker or advisor when you sellMost owners should work with a deal team when selling to private equity. That team includes a lawyer, an accountant, a tax or wealth adviser and often an investment banker or sell-side advisor who runs the process. You can sell without a banker, but you carry the risk of mistakes.
- Retaining management and key employees when you sellKeep your management team by planning early: map key people, tell them at the right time, and give them a reason to stay, such as incentive equity, a retention bonus or a bigger role. Buyers study management depth closely, because a team that can run without you supports both price and the plan.
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