Most founders dream of their exit.
The champagne. The press release. The wire transfer.
But the reality? It’s a whole lot messier.
Worse, if you don’t know the rules of the game or who to trust …
Dreams become nightmares.
Thankfully, today’s newsletter drags everything you ever wanted to know about private equity out into the light.
Plus, this week’s five biggest headlines in consumer news.
Private Equity Revealed: 5 Lessons from Speed Dating 14 PE Firms + My Roster
Last week, I talked to 14 different private equity firms in a day.
Speed dating style. Half-hour meetings with some of the most important money people who’ll decide your future.
Anyone who wants to sell their business for a life-changing number, PE is the most likely way you will get it.
But I have seen founders build and sacrifice for years only to get screwed in the end because they didn’t know how all this works.
Information is power.
I want to demystify all the secret knowledge that sits in the shadows. The game. The players. The season. My roster.
And then, what you should do right now.
What Is Private Equity? The Game
Private equity is a game of leveraged returns.
You build a company to be durable. To be able to stand for decades, to be a legacy, to be profitable.
But that’s us, founders and operators. That is not PE’s goal. Their goal is to generate maximum returns for their shareholders.
We are judged on longevity, growth, revenue, profit. They are only judged on one thing: Internal Rate of Return (IRR).
IRR is the annual percentage rate of return that makes the net present value of all cash flows equal to zero. In simple terms? It is how fast PE makes money back for investors.
A high IRR (like 30%+) is what PE firms chase, even if it means hollowing out the company to get there.
Raise capital, deploy it, and deliver a return.
Here’s how the game works …
Say we raise $100 million from investors. Our thesis is to buy small ecom brands for low multiples of EBITDA and grow them.
We take that $100m and we line up another $200m in credit, debt to be secured by the assets we buy.
Example: We find a shoe company doing $30m in revenue and $5m in EBITDA. Growing modestly, rocky few years post covid.
We offer to buy 60% at a 4x multiple ($20m). This costs us $12m. But we have that debt, so we use $4m cash and cover the other $8m with our credit.
We now have controlling interest in a $30m revenue company for $4m in equity from the fund.
This stretches the fund out. Instead of buying 9 companies like the shoe company, we can buy 25.
But the debt has a price …
We fire a bunch of people, cut the fat, and launch wholesale.
In two years, we grow the business to $50m revenue, $10m EBITDA — we also pay down the $8m in debt to $5m.
Then, we recap.
We get a different line of credit — this time based on 3x EBITDA ($30m), secured by the shoe company itself, not us. $30m minus the $5m debt leaves us with $25m. We pay that as dividends.
We paid $4m. We paid out $25m. We own 60%, so we get $15m — 3.75x in two years = 93% IRR.
After the check clears, we don’t care all that much about the asset. It is a zombie company to us. We install an operator, tell it to pay its debt, and squeeze out whatever we can.
Truthfully, lots of these businesses go belly up.
The founder never sees another dollar. Debt is secured above equity. The PE fund is on its other, newer deals.
And on the above, the private equity group didn’t even try to fuck them. It didn’t add a mandatory dividend paid to them. Or cram preference and participation into the deal.
That’s how the game is played.
What’s My Business Worth? The Players
I get this question all the time. The easy answer is …
What someone will pay.
How do you value a deal? Size matters. The buyer matters.
Under $10m a year, you are not a brand. Smaller deals have more risk. A little wind flips a paper boat. A passionate founder can hold together a horrible business with vision and grit.
But you aren’t selling you, you are selling your asset.
Really, there are five kinds of buyers:
Executives & Family Offices
- Revenue: $1-10M
- EBITDA: Under $1M
New blood getting into an industry, someone from FAANG (MAANG) with cash who is bored. Someone trying to make a name for themselves.
They’ll usually pay the worst multiples but with the cleanest terms. I bought a few companies in this range.
Self-Funded “PE” Groups
- Revenue: $5-30M
- EBITDA: $1-5M
Small operation trying to extract synergy, barely different from a MAANG exec with too much time and money.
Private Equity (Financial Sponsors)
- Revenue: $30-200M
- EBITDA: $5-50M
They live and breathe to deploy dollars. They HAVE to. That makes them reliable, consistent, and available.
They’ll buy you dinner, send you gifts, and actually court you properly. But remember their incentives: IRR.
Strategics
- Revenue: $50M+
- EBITDA: $10M+
They have their own agenda, their own business to run. They’re the most confident buyers, usually the best terms, but also the most unpredictable.
They don’t get sold businesses. They buy businesses.
I asked the head of M&A why they bought Sour Stripes. He had a one-sentence response: “We needed a sour candy.”
It didn’t matter if you had the world’s BEST LICORICE business. It could have 50% EBITDA margins growing 100%. They would have passed.
They didn’t want licorice, they wanted sour.
Public Markets
- Revenue: $200M+
- EBITDA: $40M+
The ultimate buyer of all assets. But you don’t typically go there without going through a couple of private equity hands first.
This is where the founders completely cash out and the VCs get their exit press release.
Public markets have been brutal to ecom consumer in recent years. Shit rolls downhill.
In today’s market, sub-$1M EBITDA businesses sell for 1-3x. For the smallest brands with problems, expect 1x. For high-growth categories with potential, maybe 3x. But in any case, the multiple is significantly down.
For $100M+ deals, public market comps drive valuations. When your category is trading at compressed multiples publicly, PE can’t justify paying premium multiples privately.
It’s always relative.
What Is the State of PE? The Season
About those 14 meetings in one day.
These were mid-market funds. The largest had $80 billion under management. Second largest was $50 billion. Most were single billions or low teens.
These funds are trying to deploy a billion dollars in 10-20 bets, ranging from $25m-100m checks. They are usually the first or second institutional investor in a business, buying out seed rounds or partnering with them.
They’re the shepherds who take brands from sloppy, family-style messes to something the public can seriously buy.
Mid-market PE firms are willing to get their hands a little dirty — but at the end of the day, they’re still bankers.
Here are the five lessons I took away.
1. This year was supposed to be redemption.
2021 was HOT. Everyone made millions. 2022 was dead. Like seriously, as dead as 2009.
2023, people came back from a year off and started trying to get deals done (not many happened). 2024, people were waiting for cuts and a new business-friendly administration.
2025 has been a letdown.
2. Supply chain fears are killing deals.
I got asked about tariffs in 14/14 meetings.
It’s on everyone’s mind.
Typical consumer funds have pivoted to quick-service restaurant franchises and roofing businesses. They can’t underwrite the risk of tariffs and a global supply chain collapse.
3. Many were told to hold, not sell.
I was straight-up told NOT to sell my business 5/14 times.
“You are growing? You are profitable? You don’t have investors ... YOU SHOULD HOLD FOREVER!“
4. Some firms are aggressively buying.
3/14 funds are aggressively deploying right now, with the thesis that this is all fear.
They are getting assets for 6x EBITDA, usually off of other PE groups that need to give some sort of cash return to investors.
5. PE funds are underwater but hiding it.
2/14 groups said the quiet thing out loud — most of these vintages are underwater.
They haven’t marked their investments to the market yet. Why? Because they needed to raise the next fund.
Even if you know you have a DUD, a true STINKER of a fund, you can hide it for 4-5 years.
What Firms & Bankers? My Roster
If you want to start preparing for a sale, THIS IS THE REAL KNOWLEDGE IS POWER PART.
I’m talking to founder-owned businesses doing $30-200M topline, with 10-20% EBITDA. Or anyone headed in that direction over the next few years.
Here are a few PE firms I personally like.
Bertram Capital. They were the FIRST money in Solo Stove. So before the IPO, before Summit, Bertram found them and bought them. They are VERY good at digital. They get marketing and that’s one of their value adds.
Great Hill Partners. They were the first money in Bombas. Bombas is so fucking slept on it’s criminal. Great Hill came in, helped the founder, and was a class act every step of the way. Good people.
ACON. ACON is more lowkey. Based in DC, more jeans than suits. But they have done some amazing deals. They also have flipped and fixed a bunch of brands. Igloo and True Religion. They exited Funko to an IPO. They own New Era. They have fun.
TPG. They did ELF. Need I say more? ELF is the best beauty story in the past 20 years.
Investment bankers are the real estate agents of buying and selling business. They represent you and will prepare + shop your deal. They will get to know your brand, will already know a lot of the buying pool, and will prepare your CIM.
Bankers are expensive. They take a % of the overall transaction. 2% on MEGA deals, up to 5% on smaller deals. They work for free the whole time, until they close … usually.
Do you need a banker?
Well, no. I have a few friends who ran their own process, never signing with a banker.
But the old rule someone told me is: “When private equity sells its businesses, it always hires a banker.”
A good banker should pay for themselves 2-3x over. They are also there as a sort of therapist and life coach. They have done dozens of deals. They will keep you sane when it feels like the world is falling apart.
If you sign with a banker, you will talk to them 10 hours a week for a year. Towards the end, you are on the phone with them and traveling with them 40 hours a week.
The number one thing is culture match.
Then, bankers are very industry and geo-specific. Bankers build relationships with buyers, so being industry specific just helps get deals done and speeds up info transfer.
Here are the LA bankers I like, in order of size:
Jefferies. This is a true Middle market+ bank. They do IPOs, they do billion-dollar mergers. But they will slum it down with the single hundred million deals. Great network and high pedigree.
Moelis. They made a play to be the DE FACTO shop in LA. Another high pedigree name. They have done some mega deals with brands we all like and know.
Intrepid. They own beauty. If you have a women-focused brand, these people know everyone and cornered the market. No one has done more haircare deals. Specifically, Mike Garcia.
Sage. More boutique. All they do is consumer and brands. All members will be on your deal. They have done a lot of the DTC 2.0 deals, like Pura Vida.
Arash at Centerstone Capital. Still new, Arash was a Sage partner, did a good chunk of the deals there, and left to do his own thing. Want white glove hand holding? Arash will do that.
What Should You Do Right Now?
If you’re thinking of selling in this climate, here’s my blunt assessment …
Not a good time to sell
You will not be able to sell an unprofitable business
Multiples are still low, and the ask spread is very high.
But that doesn't mean you shouldn't start preparing.
We had an offer in 2021 from a public company to buy Ridge for $300 million. That was over 2x revenue at the time. We were going to take that deal. We engaged with a banker and began going through the whole process.
The offer was non-formal. It wasn’t binding by any means.
We were not audited back then. We did not have a Quality of Earnings (QOE) analysis — audits prove your numbers are real; QOE looks at the mechanics behind those numbers.
We did not have an accounting function. I don’t think I had a CFO in 2021.
By the time we got our shit together, that company’s stock price was down 50%. The deal fell apart.
Since then, I’ve spent ~$4 million professionalizing the accounting side of my business. If you can afford it, do it right from the beginning. It probably costs me a million dollars a year to be audit-ready.
Start building relationships, keep growing your business, and plan for a better 2026-2027 exit. The money always has to go somewhere.
If I’ve learned one thing about PE, it’s that they’ll eventually come back to consumer. They love the simple business model.
Buy low, sell high.
Merchants have been doing it for thousands of years.
The industry is full of very smart, very passionate people. Now is the best time to get to know a few funds.
The tide always turns.
If you want me to write about what you need to do to prepare for an exit, reply to this email. Aaron will send me screenshots + bother me until I do it.
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Curated by the editor of CPG Wire, this week’s five biggest headlines in consumer news.
1. OLIPOP Focuses on Convenience Channel: Twitter
Modern soda brand OLIPOP is expanding its presence in the c-store channel by launching at 7-Eleven, Circle K, Casey’s, Love’s, and a number of other chains. The fast-growing beverage brand conquered the natural, conventional, big-box, and club channels. Now it’s turning its attention to convenience.
2. Khloe Kardashian Launches Protein Popcorn Brand: Food & Wine
Khloe Kardashian just launched a high-protein popcorn brand called Khloud. The product contains seven grams of protein per serving and is free of seed oils. Khloud made its nationwide retail debut at Target and will launch online on April 29th.
Celebrities seem mildly obsessed with launching popcorn brands. In addition to Khloe Kardashian, the Jonas Brothers and the D’Amelio family have their own, too.
3. Holly Thaggard Departs Supergoop: The Industry
Holly Thaggard, the founder of suncare juggernaut Supergoop, is officially departing the company. The former teacher launched Supergoop in 2005 then sold a majority stake to Blackstone Growth in late 2021. By 2024, Supergoop’s net sales hit $400M. Thaggard will retain a minority stake in the company and plans on launching something new soon.
4. Quite Nice Secures $1M: Twitter
Quite Nice, a purveyor of high-protein, gut-healthy food products, secured $1M in funding from Sweet Spot Capital, Cistern VC, and SuperAngel Fund. The company launched in 2024 with a line of prebiotic, protein-fortified oatmeals. The funding will be used to expand headcount and enter retail.
5. Surfside Continues to Deliver Massive Growth: LinkedIn
According to Shanken News Daily, canned cocktail brand Surfside is the fastest-growing spirits brand in the world. In 2024, Surfside’s scanned retail sales jumped an impressive 360% year-over-year. What’s their secret? On-trend products, compelling branding, and unbelievable merchandising in on-premise and off-premise channels.
Like Sean said …
If you want me to write about what you need to do to prepare for an exit, reply to this email. Aaron will send me screenshots + bother me until I do it.
That’s me. I’m Aaron.
And I hereby solemnly swear that if you do write back, I will hurl your screenshots at Mr. Frank to make sure he does it.
With thanks and anticipation,
Aaron Orendorff 🤓 Executive Editor
PS, I still owe a ton of responses to your kind replies last week. I also hereby solemnly swear that I’m on it.