Dallas–Fort Worth · Choosing an advisor
How do I sell my Dallas business to private equity instead of an individual buyer?
When private equity is a realistic buyer for a Dallas company, how the sale works step by step, and what you gain and give up versus an individual.
By Michael D. Rubin, CEO & Founder · September 2026 · 836 words
To sell to private equity, you need a company large and steady enough to interest them, financials that survive a quality of earnings review, a management team that can run without you, and an advisor who brings private equity groups into a competitive process alongside other buyers. You do not choose private equity by shutting out individuals; you let both compete and then compare the offers.
Here is how that works for a Dallas owner, from deciding whether private equity is realistic to closing.
Is private equity a realistic buyer for your company?
A private equity group is an investment firm that buys companies with capital from investors, grows them and sells them later. Groups usually look for a certain level of profit, measured as adjusted EBITDA: earnings before interest, taxes, depreciation and amortization, after adding back owner perks and one-time costs. Each group sets its own minimum. Groups buying an add-on, a company to combine with one they already own, often accept smaller companies than groups buying a first platform.
Beyond size, private equity looks for steady or growing revenue, customers spread across many accounts, a management team below the owner, and a market where the company can keep growing. If those are thin today, preparation over 12 to 24 months can change the answer.
Private equity also cares about what happens after it buys. A group expects to sell the company again in some years, so it looks for ways to grow it: new locations, new services, add-on acquisitions or better systems. Showing buyers a credible growth plan, even a simple one, helps them see how they would earn a return, and that is what they are paying for.
Private equity versus an individual buyer
Equity rollover means you reinvest part of your proceeds and keep a minority stake. The structure is often called a recap, short for recapitalization. If the group later sells the company for more, your stake can pay a second time; if it does not, that part of your value is at risk. An SBA-backed loan is a bank loan partly guaranteed by the U.S. Small Business Administration, common with individual buyers. See business financing.
| Private equity group | Individual buyer | |
|---|---|---|
| Typical structure | Majority purchase, often with equity rollover and bank debt | Full purchase, often with an SBA-backed loan and a seller note |
| Your role after closing | Often stay for a period, sometimes as a leader or board member | Transition period, then usually step away |
| Management expectations | Wants a team that stays and can grow | The buyer often becomes the new manager |
| Diligence | Formal, often with a quality of earnings review and outside advisors | Thorough but usually lighter, shaped by the lender |
| Upside after closing | Possible second payment if you keep a stake | None once you are paid |
Steps to sell to private equity
- Get your numbers ready. Three years of statements that reconcile to tax returns, plus monthly results for the current year.
- Recast earnings. Document every adjustment to EBITDA so it survives a quality of earnings review, an accounting firm's test of your reported profit.
- Build the team. Identify the managers who will stay, and think about how to keep them.
- Prepare a confidential marketing package. Private equity groups read a great many; yours must be clear and supported.
- Run a competitive process. Invite private equity groups alongside strategic and individual buyers, under NDA, and ask for letters of intent (written offers with price and key terms) by a deadline.
- Compare offers on what you keep. Cash at closing, rollover, earnouts, the working capital peg (the operating funds left in the business at closing), and your role.
- Close with your attorney and CPA. The tax and legal structure are their call.
Mistakes that weaken a private equity sale
Approaching one group alone gives it all the bargaining power. Signing an exclusive letter of intent before you have seen other offers does the same. Treating rollover equity as guaranteed money overstates what an offer is worth. And add-backs that cannot be documented tend to disappear in the quality of earnings review, lowering the price late in the process when you have the least room to walk away.
Our article on comparing offers shows how to set a private equity offer next to an individual's on equal terms.
How we bring private equity to the table
MDR & Associates goes first to its own database of qualified individual buyers, capital groups and private equity groups, and in 2023 it was named in the Axial Advisor 100 among the buy-side's most referred lower middle market M&A advisors. We negotiate multiple letters of intent at the same time, so you can compare private equity and individual offers side by side, and a principal of the firm is in every negotiation. Every buyer, private equity or not, signs a confidentiality agreement and completes a financial profile before seeing anything that identifies your company.
We serve Dallas owners from Frisco. Begin with the free valuation snapshot or a confidential meeting through our Dallas contact page.
Where this fitsDallas business brokers and M&A advisors →