Would a PE Firm Even Want 12 Owners and Fractional Equity?

0:00My name's Clint. I own a residential roofing contracting, storm restoration business in Atlanta. Uh one of the things that we're seeing is companies in our region are having really ridiculous PE exits right now. Uh it seems like PE's overpaying, family offices are overpaying. Uh we do not I did your BAM worksheet yesterday. We're we're not there yet. Uh I'm worried that I'll miss the window on a high exit and I've got 12 business owners that we've trained, worked with, become very good friends with that have all expressed interest in a merger.

0:33They're all roofing companies, all in the region. We're all in the same software and platform. I'm worried about Nobody wants to give up control. And how do I create an offer around them that would also allow for a higher PE exit? And would that even be attractive to a PE company to have 12 business owners in fractional equity and no >> Well, not that it wouldn't be a Like so fundamental the the the the foundational businesses So what's the What would be the the consolidated EBITDA of all 12?

1:01>> It's a little over 10 million between all 12. >> Yeah, so that would be interesting. So I think I would probably approach this from like a Hey, um so the like I have a I'll say an acquaintance that does this um just in this space that you're in. Um and so the offer that he gives is Okay, if you sell on your own right now, you're either unsellable or maybe you'll get like a 5x, right? And so I will you you give me an option today for 100% of your business that I can then use It's kind of like wholesaling where you get a contract for purchase, right? So it's like let me get an option for a 6x or 7x, which is more than you can get. And then you go to all the other ones and it's like this gives me control. And then you basically can try and sell for nine, and then you make the spread there, and you can even contribute yours as goodwill if you wanted to um into the mix as like kind of the the starter. I'm guessing you're not the biggest one of the bunch, though.

1:51>> Yeah, no. That's I got to come and sell some people who are bigger than me on this idea. >> Yeah. And so um the contribution to the So, either you have the because fundamentally, if you have the uh contract of sale, and this will just go to an M&A attorney cuz they'll they'll pay for it, but um you have the contract of sale, and then you have the multiple. And so, that way they will have their slice of the pie relative to their contribution to the pie. That way it's like it's all fair, and then everybody should be just trying to gas it into the sale because they want to get their biggest slice, which awesome.

2:24We're all on the same team here. And the more we all win, the bigger the overall multiple is going to be. And so, it's just you try Like in order to get the deal done, there needs to be one person who's talking and one person in control. The rest of it's a mess. And so, like that's what you have to solve for. But like that's the sale I mean, that's the sale. All right, that's the sale. >> issue. >> And that's fundamentally, that's why you get paid millions of dollars to do it. >> All right. Thanks. >> Yeah. If you like this video and you're business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so, you can click here and you can check it out.

3:02Again, absolutely free. And since you're business owner, I appreciate you and uh enjoy.