How to find private equity buyers for your business
PE firms buy dozens of private businesses every week, and most of those transactions never appear on a public marketplace. If you're waiting for a PE firm to find you, you're likely waiting for a deal that won't come. The process works the other way: you identify the right firms, approach them correctly, and run a process that keeps you in control. Here's how that actually works.
- PE firms screen on EBITDA first. Most lower-middle-market funds want at least $1M to $2M; below that, you're an add-on target or out of scope entirely.
- Platform vs. add-on is the most important distinction: it determines which firms to approach, how they'll price you, and what your role looks like after the close.
- The fastest way to build a PE buyer list is to find who already owns your competitors, then work outward from that portfolio.
- Reaching out to PE firms without a live process almost always gives them leverage over you. A managed process with multiple buyers competing is how you get a fair price.
- For most lower-middle-market deals, an investment banker or M&A advisor is not optional. The fee comes back in the price they get you.
What PE firms actually want
Private equity firms are financial buyers. They're buying your business with investor capital and, usually, some borrowed money, so the math has to work on close. That makes their criteria fairly consistent across the sector, whatever industry you're in.
The first screen is always EBITDA, which is earnings before interest, taxes, depreciation, and amortization. This is the number PE uses to anchor a deal, and it's the most direct measure of what you actually take home from the business after operations but before financing. A healthy EBITDA margin matters more than revenue. You can use our business valuation calculator to get a quick sense of how your EBITDA translates to a valuation range before you start any buyer conversations.
Beyond the numbers, PE buyers look for four things:
- Recurring or contractual revenue. A business where customers pay monthly, renew annually, or are under long-term contracts is inherently less risky than one where every dollar has to be re-earned from scratch. PE firms pay meaningful premiums for recurring revenue because it makes their post-acquisition modeling predictable.
- Owner independence. A business that relies entirely on you to run, sell, and deliver will scare most PE buyers off. They're not buying a job. They need the business to keep running after you step back, which means systems, a real management team, and customer relationships that aren't personally yours.
- Clean, auditable financials. PE firms will go through your books in detail. Three to five years of clean financial statements, a clear add-back schedule, and a well-kept customer list are table stakes. Messy accounting delays deals and gives buyers ammunition to reprice.
- A visible growth angle. PE isn't buying your business to hold it flat. They want to see a credible path to growth, whether that's expanding into adjacent markets, adding product lines, acquiring competitors, or improving margins through operational changes. Your job is to show them where the upside is, not just where you are today.
For a fuller picture of the multiples PE firms pay by sector, our EBITDA multiples by industry guide breaks down current deal pricing across a wide range of verticals.
Platform vs. add-on: the most important distinction
Before you approach any PE firm, you need to understand whether you're a platform candidate or an add-on target. The difference shapes everything: which firms to approach, how they'll price you, what your post-close role looks like, and how much leverage you'll have in the negotiation.
A platform acquisition is a standalone investment. The PE firm is buying your company to serve as the anchor of a new portfolio holding. Platforms are typically larger, with $2M or more in EBITDA, and they're often the first acquisition in a specific sector before the PE firm starts buying smaller competitors and folding them in. As a platform, you usually have a longer post-close involvement: the PE firm wants you in place while they build out the group around you.
An add-on acquisition (also called a bolt-on or tuck-in) is when a PE-backed company buys your business to fold it into an existing platform. The acquirer here isn't a PE fund directly, it's the operating company the fund already controls. Add-ons can happen at smaller sizes because the platform absorbs the overhead. The price is often higher than you'd expect, because the acquiring platform gets more out of your customers and capabilities than they would as a standalone. Your transition out is frequently faster, since the platform already has management in place.
If you're a smaller business, add-on buyers are often a much more accessible path to PE money than trying to attract a standalone fund. Find the PE-backed platforms in your sector and approach them directly.
How to build your PE buyer list
This is where most owners get stuck. "How do I know which firms to talk to?" The answer is usually closer than you think.
Start with your competition. Find two or three businesses in your industry that have been acquired by PE in the last three to five years. Look them up on LinkedIn, on the acquirer's website, or in press announcements. Who bought them? That PE firm already knows your sector, has thesis conviction about it, and may be actively looking for more companies like yours. That's your highest-probability first call.
Search the portfolio pages of known sector-focused funds. Most PE firms publish their portfolio holdings on their websites. Scan them for companies that overlap with yours in industry, geography, or customer type. A firm that owns several companies that look like your business has already bought into your sector. They understand the market, they may want more scale, and they're not going to need to be convinced your industry is worth investing in.
Use deal announcement databases. PitchBook, Capital IQ, and Axial are the primary institutional tools for tracking private deals. Axial in particular caters to the lower-middle-market and lets sellers post anonymously to attract PE buyers. These databases are most effective when used by an advisor with subscriptions and existing relationships, but even a simple Google search for "[your industry] private equity acquisition 2024" will surface relevant deal announcements and the firms behind them.
Check SBIC funds for smaller deals. Small Business Investment Companies are SBIC-licensed funds that can deploy capital in smaller transactions, often below the floor of typical PE. If your EBITDA is under $1M, an SBIC fund may be a realistic option where a standard PE firm wouldn't be.
How to approach PE firms without giving up leverage
Once you have a buyer list, the temptation is to start sending emails. Don't do it alone.
PE firms are professional acquirers. Their deal teams evaluate hundreds of opportunities per year. When an owner reaches out directly with no process behind them, the firm immediately knows two things: there's no auction, and there's no deadline. Both of those conditions work in their favor, not yours. They can low-ball an initial interest, take their time on diligence, and squeeze you on terms because you have no alternative offer on the table.
A proper outreach process works differently. You (or your advisor) contact a curated list of buyers simultaneously. Every firm knows there are other conversations happening. That competitive pressure, even if it's only implied, compresses timelines and keeps pricing honest. The moment you're talking to just one buyer, you've handed them most of the leverage.
The standard sequence, whether run with an advisor or on your own, looks like this: a one-to-two page anonymous "teaser" that describes the opportunity without identifying the company, followed by NDAs for interested parties, then a detailed confidential information memorandum for qualified buyers, followed by management meetings and letters of intent. Each stage narrows the buyer pool while keeping competitive tension alive until you've signed an LOI. For more on the buyer types you'll encounter throughout this process, including how PE, search funds, and strategics compare, see our full breakdown of the main types of business buyers.
Do you actually need an M&A advisor?
For most businesses at or above $1M in EBITDA looking to sell to PE, the honest answer is yes. Not because you can't do it alone, but because the math rarely works in your favor when you try.
An investment banker or M&A advisor brings three things you can't easily replicate. First, a proprietary list of relevant PE firms and add-on platforms, built from years of deal flow and maintained relationships. Second, the ability to run a real competitive process with multiple buyers moving in parallel rather than sequentially. Third, the experience to structure the deal, negotiate the terms, and protect you in diligence from repricing tactics that experienced PE deal teams use routinely.
The cost is typically a success fee of 3% to 8% of the transaction value, plus a modest retainer. That fee is real, but it's generally offset by the price premium a competitive process produces versus a bilateral negotiation. Sellers who run their own processes against PE routinely leave money on the table because they don't know when to walk away, who else might bid, or how to push back on due diligence repricing. Our guide to the best sell-side M&A advisory firms is a useful starting point if you're evaluating your options.
What happens after a PE firm expresses interest
An expression of interest is the beginning of a long process, not a deal. Here's what happens next.
After initial conversations, a serious PE buyer will submit a letter of intent. The LOI is non-binding on most terms, but it usually contains an exclusivity period, typically 45 to 90 days, during which you agree not to talk to other buyers while they complete due diligence. This is the most important moment in the process to have experienced counsel. Once you sign an exclusivity provision, your leverage drops substantially. Everything you negotiated before exclusivity is what you're starting from; don't count on improving it much during diligence.
Due diligence is thorough. Expect them to audit your financials in detail, talk to your key customers (under NDA), review your contracts, examine your employee agreements, and probe your technology stack and IP ownership. Surprises that surface in diligence are the most common cause of price reductions and deal failures. Clean books, organized contracts, and honest disclosure upfront are the best hedge against a late-stage reprice.
PE deals frequently include rollover equity, where you keep a 10% to 30% stake in the combined entity through the PE firm's hold period and get a second payout when they eventually sell. Rollover can be genuinely lucrative if the PE firm executes well. Evaluate it carefully: you're trading a guaranteed dollar today for a larger potential dollar in three to seven years, as a minority shareholder with less control over the outcome. Make sure the governance terms and drag-along provisions in the deal documents reflect what you actually agreed to before you sign.
A note on timing
PE firms deploy capital within fund cycles. A fund raised in 2022 is under pressure to deploy by 2025 or 2026 and to start showing exits. A fund raised in 2025 has fresh dry powder and is actively building its portfolio. Selling to a fund mid-cycle, roughly two to three years after the fund closed, often produces better terms because the firm is motivated to invest, not rushing to exit or waiting for new capital.
The best time to talk to PE is when you don't have to, when your business is growing, your numbers are clean, and you have runway. Sellers who come to the market under pressure, after a down year, or with a hard deadline, give buyers exactly the information they need to negotiate harder. Start the education process well before you're ready to actually sign, and you'll be in a much stronger position when it matters.
If you want a vetted advisor who works specifically in PE-targeted transactions at your deal size, ProCloser can match you with the right firm. It's free to sellers, and the first conversation doesn't commit you to anything.
Finding private equity buyers: FAQ
What does private equity look for when buying a business?
PE firms screen on EBITDA first, typically requiring $1M or more for a lower-middle-market fund. Beyond the number, they want recurring revenue, a business that doesn't depend entirely on the owner to operate, clean financials going back several years, and a credible path to growth after the acquisition. They're buying the gap between where your business is now and what it can become with their capital and oversight. Use the valuation calculator to see where your numbers sit before your first buyer conversation.
What is the minimum EBITDA for a PE firm to consider my business?
Most lower-middle-market PE funds want at least $1M to $2M in EBITDA for a standalone platform acquisition. Below that, you're typically in add-on territory, where a PE-backed platform company might acquire you and fold you in. For very small businesses, individual buyers, search funds, and SBA-financed owner-operators are usually the more realistic pool. The right threshold varies by sector; our EBITDA multiples by industry guide shows what buyers are paying across verticals.
What is the difference between a platform acquisition and an add-on?
A platform acquisition is when a PE firm buys your company as a standalone anchor investment, typically at $2M or more in EBITDA. An add-on is when a PE-backed operating company acquires your business to bolt it onto an existing platform. Add-ons happen at smaller sizes and often at higher multiples relative to standalone deals because the acquirer gets more value from combining you with what they already own. If you're below PE's minimum deal size, targeting PE-backed platforms in your sector is often a better path than pitching the funds directly.
Should I contact PE firms directly or use an M&A advisor?
Contacting PE firms directly without a process underway almost always weakens your position. PE deal teams know that no active auction means no deadline and no competition, which gives them leverage on price and terms. An M&A advisor reaches multiple firms simultaneously, manages the information flow, and keeps buyers competing, which is what actually produces a fair price. The advisor's fee is typically offset by the premium a competitive process creates versus a single-buyer negotiation.
How do I find PE firms active in my industry?
Start with your own competitive landscape. Find two or three companies similar to yours that have been PE-acquired in the last few years and identify who bought them. That list of acquirers already has thesis conviction about your sector. Then check the portfolio pages of sector-focused PE firms directly, and consider Axial for lower-middle-market deal exposure. The most efficient approach is through an advisor with active PE relationships, since they know which funds are currently deploying versus fully invested.
How long does selling to a private equity firm take?
Typically four to eight months from first formal outreach to close. The timeline includes preparation and buyer outreach (four to six weeks), management meetings and initial offers (two to four weeks), due diligence and LOI (four to six weeks), and legal documentation and closing (four to eight weeks). Add-on acquisitions sometimes move faster because the PE-backed platform already knows your market. The biggest delays usually come from disorganized financial records, third-party consents on key contracts, or surprises in diligence that trigger repricing conversations.
What is rollover equity and should I take it?
Rollover equity means keeping a stake, typically 10% to 30%, in the business after the PE acquisition rather than taking 100% cash at close. When the PE firm exits later, your stake pays out again. It can produce a significant return if the firm executes well. The risk is that you become a minority shareholder in a company controlled by someone else, with your payout depending on their exit decision and timeline. Evaluate the firm's track record, the governance terms you'd retain, and the specific drag-along and exit provisions before accepting any rollover structure.
Find an advisor who knows PE buyers in your sector.
ProCloser matches sellers with vetted M&A advisory firms, including investment bankers who specialize in PE-targeted transactions at the lower-middle-market. Free to sellers. No retainer required to start the conversation.
Tania leads ProCloser's network of vetted M&A advisory firms and works with business owners every week on valuation, buyer fit, and getting matched to the right advisor to sell. Get matched free.