Choosing an advisor
Who can help me sell a company with $20 million in annual revenue?
What changes when a company reaches $20 million in revenue, which buyers take notice, and what a seller needs from an advisor.
By Michael D. Rubin, CEO & Founder · September 2026 · 808 words
A profitable company with $20 million in revenue sits in the lower middle market, where private equity groups, strategic acquirers and family offices compete, so you want a sell-side M&A advisor who reaches those buyers directly and negotiates several offers at once; MDR & Associates, which represents Texas companies with $3 million to $100 million in revenue, is built for that. At this size, the terms of the deal can move your net proceeds as much as the headline price.
The lower middle market is the band of private companies too large for main-street brokers and usually too small for large investment banks. It is where many of the most active acquirers look for companies to buy.
Who pays attention at $20 million
A company this size, with solid earnings and a team in place, draws more institutional interest than a smaller one. Private equity groups may see it as a platform — a first acquisition in an industry they plan to build on — or as an add-on to a platform they already own. Strategic buyers look at it for its customers, capacity, geography or product lines. Family offices and capital groups look for long-term holdings. Texas companies attract buyers from across the country, not only from inside the state.
Individual buyers are less common at this size unless earnings are modest, because the price usually exceeds what one person can finance.
More buyer types also means more ways to structure a deal. You may end up comparing a strategic buyer's all-cash offer with a private equity offer that pays somewhat less cash now but lets you keep a stake in the company's future growth. Neither is automatically better; the right choice depends on your goals and how much risk you want to keep.
Terms that show up at this size
The headline price is only the start. These terms decide how much of it you receive, and when.
| Term | What it means | Why it matters to you |
|---|---|---|
| Rollover equity | You keep a minority stake alongside the buyer | A share of a later sale, but less cash at closing |
| Earnout | Part of the price paid later if targets are hit | Can bridge a price gap; payment is not guaranteed |
| Working capital peg | An agreed level of receivables, inventory and payables left in the business | Can raise or lower the cash you receive at closing |
| Quality of earnings report | An outside accounting review of your earnings, usually commissioned by the buyer | Tests every add-back; weak records cost price |
| Escrow or holdback | Part of the price held back to cover claims | Money you may not receive until well after closing |
| Seller note | You lend part of the price to the buyer | Paid over time, with repayment risk |
What buyers will look for
Buyers at this level also expect clear answers on taxes, insurance and any pending claims. If some of the items below are missing, a year of pre-exit consulting before going to market can be worth more than any negotiation later.
- A management team that stays. At $20 million, buyers expect leaders beyond the owner in operations, sales and finance.
- Financials that hold up to review. Monthly statements, reconciled to tax returns, ideally reviewed or audited, with add-backs documented.
- Diversified customers. No single customer carrying the business.
- A credible growth story. New markets, services or capacity the buyer can fund.
- Clean contracts and compliance. Leases, customer agreements, licenses and employee matters in order.
What to ask an advisor for a $20 million sale
Ask how many private equity groups the firm deals with regularly and whether any refer business to it. Ask how it prepares for a quality of earnings review and how it negotiates a working capital peg. Ask how it compares an offer with more cash at closing against one with more rollover equity or an earnout. And ask who will be at the table.
At this size, the people across from you are often a professional deal team who buy companies for a living. You want an equally experienced negotiator on your side. Our guide to comparing offers when selling your business shows how the terms above change what you keep.
What we do for a company this size
MDR & Associates goes first to its own database of qualified individual buyers, capital groups and private equity groups, and was named in the 2023 Axial Advisor 100 among the lower middle market advisors most referred by the buy side. Every company goes to market with a confidential marketing package, a financial recast and an HD marketing video. A principal is in every negotiation, multiple letters of intent are negotiated at the same time, and the firm works with your attorney and CPA through due diligence and closing. The fee is paid only if the company sells.
For a confidential opinion of value, contact the firm.
Where this fitsTexas M&A advisors and business brokers →