Basket and Cap in M&A Indemnification in 2026: The 0.5%-1% Basket and 10%-25% Cap Ranges
Basket and cap in M&A indemnification are the two mechanics that limit seller liability post-close. The basket (deductible or tipping) sets a minimum threshold before buyer indemnification claims trigger , typically 0.5-1% of purchase price. The cap sets the maximum aggregate seller exposure , typically 10-25% of purchase price without RWI, dropping to 0.5% retention […]
What is a No-Shop Clause and When Should You Agree to One?
What is a No-Shop Clause and When Should You Agree to One? Quick Answer A no-shop clause is an exclusivity provision that prohibits a seller from soliciting or accepting competing offers for a defined period, typically 30 to 90 days. It gives the buyer uninterrupted time to complete due diligence and protects both parties’ investment […]
Search Fund Earnouts: Fair Deal or Hidden Trap for Sellers?
Search Fund Earnouts: Fair Deal or Hidden Trap for Sellers? Quick Answer Search fund earnouts typically push 15% to 30% of purchase price into a 2 to 3 year measurement period, usually tied to EBITDA. They can be fair when the buyer offers a cushion, GAAP-plus accounting, an ordinary-course covenant, and a no-shop clause that […]
Inside the Search Fund Acquisition Process (From a Seller’s Perspective)
Inside the Search Fund Acquisition Process (From a Seller’s Perspective) Quick Answer A search fund is an investment vehicle where an entrepreneur raises capital to identify and acquire an existing business, typically a profitable, founder-owned company generating 500k to 10 million in EBITDA. From a seller’s perspective, search funds represent a buyer pool of operationally […]
How to Avoid Getting Lowballed When Selling Your Business
How to Avoid Getting Lowballed When Selling Your Business Quick Answer To avoid getting lowballed when selling your business, understand your market value by assessing financial statements and industry trends, prepare your business by addressing operational weaknesses, and negotiate confidently with multiple qualified buyers. Businesses typically sell for 2x to 4.5x SDE depending on industry, […]
What Deal Origination Really Means in 2026: The 4 PE Sourcing Strategies and Why the Definition Matters
Deal origination is how PE firms find investments before they go to auction. The 4-step sourcing process, who does it, and why proprietary deals close at 30% lower multiples than auction deals.