Where the dominance and counter-strategy pieces cover how PE behaves in the market, this is what a seller actually encounters at the table. A PE deal is not a clean retirement — it is a structured, multi-year relationship with specific financial and tax mechanics. Knowing them in advance is the difference between reading an offer and being read by it.
§ 01 · How they valueEBITDA, then engineering.
Financial buyers value almost exclusively on a multiple of normalized EBITDA — earnings adjusted for owner-specific and non-recurring items. Small agencies targeting bolt-on status (under ~$3M revenue) typically trade at 4×–6×, reflecting lower scale and higher integration risk; platform-eligible agencies ($3M-plus revenue, clean books, management that can support further acquisitions) command 7× or higher. Organic growth, 90%-plus retention, book diversification, and producer depth move the actual number. On top of the raw multiple sits the financial-engineering layer — the same arbitrage from the PE-dominance piece: a firm paying 9× to a small book is betting that EBITDA is worth 13×–15× inside its platform at exit.
| The financial-buyer deal | Value |
|---|---|
| Tuck-in multiple (under ~$3M revenue) | 4×–6× normalized EBITDA |
| Platform-eligible multiple ($3M+) | 7×+ |
| Rollover-equity requirement | 20%–30% of proceeds |
| Management retention term | 3–5 years |
| Intangibles tax amortization | 15 years |
§ 02 · Rollover and retentionSkin in the game.
Two structural requirements follow from PE's investment orientation. Rollover equity asks the seller to reinvest 20–30% of proceeds into the acquiring entity — aligning incentives through the hold, sharing risk, and offering a "second bite of the apple" if the platform exits at a higher valuation later. Sellers should model both the cash at close and the projected exit payout to see the full economic picture, because the rollover is deferred, at-risk value. Management retention follows: PE invests in teams it does not intend to run itself, so it almost universally requires the selling owner and one to three top producers to sign 3–5 year employment agreements with extended non-competes. A PE sale is a transition into a structured employment relationship, not an immediate exit — a fit a seller must honestly assess.
§ 03 · The asset saleWhy it's non-negotiable.
Financial buyers almost always structure the deal as an asset sale rather than a stock sale, for two reasons. The first is liability shielding: buying enumerated assets — the book, carrier appointments, goodwill, trade name — rather than the legal entity leaves pre-closing liabilities (past errors-and-omissions claims, employment suits, tax debts) with the seller, giving the buyer a clean balance sheet and no successor liability. The purchase agreement enumerates the "excluded liabilities" that stay behind, and the exhaustive diligence — typically a formal quality-of-earnings study — exists partly to identify them. The second reason is tax: an asset purchase resets the buyer's basis to the purchase price, and the resulting goodwill and intangibles amortize over 15 years — an $8M goodwill allocation throws off roughly $533K a year in deductions, a material after-tax improvement for the buyer.
§ 04 · The seller's side of the structureNet, not headline.
What benefits the buyer often costs the seller. The asset structure typically raises the seller's tax bill — acutely for C-corporations, which can face double taxation at the corporate and shareholder levels. The lesson is the one that runs through every transaction piece: model true net proceeds — the after-tax cash actually received, plus the risk-adjusted value of rollover and any earn-out — not the headline number. The allocation between goodwill and ordinary-income items is consequential and belongs to the seller's tax advisor; this is market education, not tax advice. The full anatomy of these structures is in transaction types and deal-structuring mechanics.
The headline multiple is the buyer's marketing; the net proceeds are the seller's reality. Rollover, retention, and the asset structure all sit between the two — and a seller who reads only the first number negotiates against themselves.
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Terminology on this shelf
- Financial buyer
- An investor — primarily PE — acquiring for return rather than operational synergy.
- Rollover equity
- A 20–30% reinvestment of proceeds into the acquiring entity, keeping the seller aligned through the hold.
- Asset sale
- A purchase of specific assets rather than the legal entity — avoids successor liability, resets tax basis.
- Step-up in basis
- The reset of acquired asset values to purchase price, enabling 15-year amortization of intangibles.
- True net proceeds
- The after-tax cash actually received — the only figure that matters versus the headline price.