Mastering Basket and Cap in M&A Indemnification
Mastering Basket and Cap in M&A Indemnification Quick Answer Basket and cap are indemnification provisions in purchase agreements that control post-closing risk allocation between buyer and seller. A basket sets a minimum threshold of losses before the seller must indemnify the buyer, typically ranging from 10,000 to 100,000 dollars or 0.5 to 1 percent of […]
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?
Search Fund Earnouts — Fair Deal or Hidden Trap? Quick Answer Earnouts in search fund deals are contingent payments tied to future performance that bridge valuation gaps between buyers and sellers, typically representing 10 to 40 percent of the purchase price. They can benefit sellers by capturing upside if the business performs well, but carry […]
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 Is Deal Origination? 4 PE Sourcing Strategies (2026)
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.