If you want to buy a $5,000,000 business, you don’t need $5M in the bank. You need a “Bankable Structure” that minimizes your risk and maximizes your leverage…

The most successful acquisition entrepreneurs use a “Triple-Layer” capital stack. This isn’t just a way to pay; it’s a way to de-risk the transition for everyone involved.

For a $5,000,000 acquisition, a professional “Head of Terms” looks like this:

1. Senior Secured Debt (51.6%): $2,580,000

The bank provides the foundation. They believe in the cash flow, not just your resume. This is your cheapest capital.

2. Seller Preferred Equity / Seller Note (33.4%): $1,670,000

This is the “Skin in the Game” for the seller. By keeping 33% of the deal on the table, the seller proves they aren’t running away from a sinking ship. It bridges the gap and aligns their interests with yours.

3. Buyer Common Equity (15%): $750,000

This is where the magic happens. You don’t have to write this check alone. You bring in Co-Investorswho provide the cash in exchange for a piece of equity.

Why This Works?

For the Seller: They get a massive payday at closing (the bank’s 51% + your 15%), plus a high-interest “annuity” via the Seller Note.

For the Investors: They get to back a “Lead Acquirer” (You) who is doing the hard work of running the company.

For YOU: You control a $5M asset. You earn a management fee. You earn “Carry” (the upside). And you do it while preserving your own capital.

As the Lead Acquirer, your job isn’t just to “buy a job.” It’s to manage the Payment Waterfall. You ensure the operating expenses are paid, the bank is happy, the seller gets their check, and the leftover cash builds your equity month after month.

The deal of a lifetime is out there. Stop looking for a salary and start looking for a Capital Stack.

Have a great week!

Sebastian H. Amieva

Merger & Acquisition Expert | Mentor | Investor

This week, we're diving into the fundraising method that gets investors to chase you.

Here’s what you’ll learn in the next 3 minutes:

How to use a "Not Raising" Tour to build a pipeline of warm, engaged investors months before you officially ask for money.

The exact language to create scarcity and social proof, turning your outreach from a request into an exclusive invitation.

How to orchestrate a fundraising "blitz" that sparks FOMO and creates a competitive dynamic among VCs.

Let’s get into it 👇

Phase 1: The "Not Raising" Tour

The most important part of this strategy happens months before you actually need the money. Instead of waiting until your runway is short and you’re desperate, you go on a “Not Raising” Tour.

For 3-6 months before your target fundraise date, you should be actively building relationships. You schedule coffees, Zooms, and update calls with your target investors. But here’s the key phrase you use in every single meeting:

"Just to be clear, we're not actively raising right now, but I wanted to keep you in the loop on our progress and get your feedback."

This is a magic phrase. It immediately drops the investor’s guard. There's no pressure, no sales pitch. You're just two smart people talking about a business. It allows you to:

Build genuine relationships.

Get priceless feedback on your model.

Prime them with your story so they feel like insiders.

This isn’t just about random coffees; you need a system to track it. Whether it's a dedicated CRM or a simple spreadsheet, this is your space to track every conversation, every piece of feedback, and every personal detail (like their kid’s college or their favorite sports team). You’re building a relationship map that will become the foundation for your blitz.

Pro-Tip: If you want a ready-made system for this, I built the exact CRM I use for tracking these conversations and key details into my Investor Playbook template. It's the fastest way to put this part of the strategy into action. InvestorPlaybook access

Phase 2: Planning the Blitz

Once your metrics are dialed in and you're ready to go live, you don't just send out a mass email. You plan a coordinated push.

Go through your CRM and identify the 10–15 best-fit investors—people who’ve tracked your progress, align with your stage and category, and could realistically move in a 2–3 week window.

This is your “A” list.

Then comes the setup.

Instead of vague scheduling emails like “Let me know what works for you,” you anchor the conversation in intention and momentum:

"I'm going to be in New York for two days—next Tuesday and Wednesday—to meet with a handful of select funds about our seed round. I have one slot left on Wednesday afternoon and would love to include you. Are you available?"

You’re signaling three things:

This is a formal, serious process.

There is limited space (scarcity).

Other investors are already involved (social proof).

You’ve just changed the entire dynamic. You’re no longer asking for their time; you’re offering them a spot.

Phase 3: Execution

This is where the magic happens. After you meet with Investor A and mention you’re also meeting with Investors B and C, what’s the first thing they do? They call each other.

And that’s because investors talk. That chatter creates buzz, and buzz creates the fear of missing out. This is the "snowball effect." No investor wants to be the one who passed on a deal that all their peers jumped on. Suddenly, they start chasing you for updates.

Want to take it to the next level? Spike the FOMO.

One of the most effective ways I've seen to do this is by hosting a small, exclusive dinner.. Don't just invite VCs. Have a well-known industry figure, high-net-worth individuals, and senior partners from top funds at the table. When important people see other important people associated with your company, the round can fill itself overnight. The social proof becomes undeniable.

Sebastian H. Amieva

I'm training people to build an international movement of qualified business buyers because the world needs people to take over businesses.

That's my mission. www.sebastianamieva.com

1. Protects the Seller

When a business owner wants to sell, they’re often selling their life’s work, reputation, and employees’ livelihoods. A qualified buyer reassures them that the business will continue to operate well after the sale.

⸻

2. Reduces Risk of Deal Falling Through

Many deals fail because buyers don’t have the money, financing, or know-how to close or run the business. A qualified buyer minimizes that risk, making the transaction smoother and faster.

⸻

3. Faster and Smoother Process

Sellers are more likely to prioritize negotiations with qualified buyers. Proof of funds, industry experience, or a solid plan speeds up due diligence and closing.

⸻

4. Better for Employees and Customers

Qualified buyers are typically capable of keeping the business running successfully. This ensures jobs are preserved, customers continue receiving products or services, and the business reputation remains strong.

⸻

5. Access to Better Opportunities

For the buyer, being “qualified” opens doors to higher-quality businesses that may never even be publicly listed for sale, because the seller trusts only serious buyers.

⸻

In short: it’s not just about money—it’s about trust, capability, and smooth transition.

Sebastian H. Amieva

• Bank statements or investment statements: Shows you have enough money to buy the business.

• Loan pre-approvals: If financing part of the deal, showing a bank is ready to lend helps.

• Liquid assets or lines of credit: Ensures the business can keep running smoothly after purchase.

💡 Tip: Sellers want to see that you can close the deal quickly without financial delays.

⸻

2. Background and Experience

• Resume or business portfolio: Highlight relevant industry experience, management roles, or previous acquisitions.

• Track record of running or scaling businesses: This builds trust that you can handle the transition.

💡 Tip: Even a smaller but related experience can count if you show you understand operations and growth strategies.

⸻

3. Business Plan or Intent Letter

• Letter of Intent (LOI): A short document outlining your plan for the business, your proposed terms, and timeline.

• High-level plan: Shows you’ve thought about how to run the business, maintain employees, and grow revenue.

💡 Tip: You don’t need a 100-page document—sellers care about clarity and seriousness.

⸻

4. Professional Team

• Lawyer, accountant, broker: Sellers like buyers who bring professionals—they know the process, reduce mistakes, and signal credibility.

• Advisors or mentors: Having a team shows you can handle complex decisions and negotiations.

💡 Tip: Even a small team is enough to signal you’re not doing this casually.

⸻

5. References / Reputation

• Past business partners, mentors, or clients: Can vouch for your honesty, reliability, and ability to manage a business.

• Industry connections: Sellers feel safer when you’re known or respected in the field.

💡 Tip: Reputation matters. Sellers often prefer buyers who come recommended by someone they trust.

⸻

✅ Bottom Line

A “qualified business buyer” is someone who can actually close the deal, run the business well, and preserve its value. Sellers often think:

“If this person checks all these boxes, I can sleep at night knowing my business and employees are in good hands.”

Sebastian H. Amieva

Acccording to two surveys, things change for founders who sell their business. ¹

How so, you say? Do they realize their dreams?

Thanks for reading this M&A Factoid. Subscribe for free to receive new posts and support my work.

Yes

Seventy-eight percent claim that the sale enhanced their lifestyle.

More specifically, on a scale of 1 to 10, they say –

• Their day-to-day levels of stress dropped 35% or from a rating of 6.5 to 4.2;

• Their “Life Satisfaction” rose 21% or from 7.0 to 8.5.

So it seems that most founders who sell their business do achieve the rewards about which they had dreamed.

Yet Also No

After selling, 60% reported a “Sense of Loss or Purposelessness” and 30% say they faced “Mental Health Challenges.” Some material portion of these challenged people sought treatment for that angst according to another survey that we’d like to see independently replicated.

And while I’m at it, didn’t you expect “Life Satisfaction” to rise by more than 21%?

Restless Hearts

As the Eagles say, it’s those restless hearts that never mend, climbing the heights of one mountain only to see and strive for the next one

In Factoid #8 we’ll talk about why company owners cash out.

See ya in the inbox !

Sebastian Amieva

Investor / M&A Expert / Mentor

www.sebastianamieva.com

In the world of acquisition entrepreneurship, there is a specific brand of magic known as the Leveraged Buyout (LBO). It’s the art of acquiring a cash-flowing asset using “Other People’s Money” (OPM), effectively turning a small amount of equity—or sometimes none at all—into the ownership of a multi-million dollar enterprise.

But once the champagne is finished and the closing documents are signed, the reality of the Payment Waterfall sets in.

For the uninitiated, the waterfall sounds like a bureaucratic list of line items. For the seasoned entrepreneur, however, the waterfall is the operating manual for the business. It dictates how you breathe, how you grow, and how you eventually get rich. If you want to play in the big leagues of M&A, you have to understand exactly whose hand is in the cookie jar and why you, the owner, are purposefully the last person to eat.

The Philosophy of the Last Chair

To be a successful acquisition entrepreneur, you must check your ego at the door regarding how “profit” works. In a standard startup, you might split profits with a partner. In an LBO, you are managing a complex hierarchy of stakeholders.

The waterfall is a legal and structural “order of operations.” It ensures that the most conservative capital (the banks) is protected, while the most aggressive capital (your equity) carries the burden of performance. This isn’t a disadvantage; it is the very reason the bank lent you the money in the first place. They aren’t betting on your genius; they are betting on the rigidity of the waterfall.

1. The Lifeblood: Operating Expenses

Before a single lender or seller gets a penny, the business must breathe. Operating Expenses (OpEx) sit at the top of the waterfall because a dead business pays no debts.

This includes your staff’s wages, the rent on your facility, the electricity, and the raw materials. As an entrepreneur, your first job isn’t to pay the bank; it’s to protect the Operating Margin. If you lose control of your OpEx, the waterfall dries up before it even starts, triggering defaults that can strip you of the company. This is why the first 100 days post-acquisition are focused on efficiency. Every dollar saved in OpEx is a dollar that flows further down the waterfall to build your equity.

2. The Gatekeeper: Senior Debt Service

Next comes the “Senior” lender—usually a commercial bank or an SBA lender. They provided the “fuel” for your acquisition.

Senior debt service consists of two parts: Interest and Amortization. * Interest is the cost of the money.

• Amortization is the forced repayment of the principal.

In a leveraged deal, this is your largest fixed hurdle. The bank doesn’t care if you had a slow sales month or if your delivery truck broke down. Their payment is a non-negotiable “must-pay” item. This is where the concept of the Debt Service Coverage Ratio (DSCR) lives. If your business generates $500k in free cash flow and your debt service is $400k, you have a 1.25x coverage. That margin is your “oxygen.”

3. The Safety Net: Required Reserves

New owners often overlook this step. Lenders frequently mandate CapEx Reserves or Debt Service Reserves. Think of this as a forced savings account. The waterfall diverts cash into a locked box to ensure that if the roof leaks next year or the economy dips, the bank is still protected. While it feels like “losing” cash flow today, this is actually an insurance policy for your ownership. It prevents a temporary cash crunch from becoming a total loss of the asset.

4. The Bridge: Seller Notes and Preferred Equity

This is where the “creative” part of your deal lives. Most SMB acquisitions involve a Seller Note. The seller has agreed to act as a secondary lender to help bridge the gap between what the bank gave you and the purchase price.

Here is the catch that many entrepreneurs miss: The Seller Note is “Subordinated.” In plain English, this means the seller is standing behind the bank in line. If the business is struggling and you only have enough money to pay the bank, the seller gets nothing that month. Most bank intercreditor agreements actually prohibit you from paying the seller if your bank covenants (like a minimum profit level) aren’t met. This creates a powerful alignment of interests. The seller wants the business to succeed under your leadership because their “tail” of the money depends entirely on your ability to manage the top of the waterfall.

5. The Prize: Buyer Common Equity

Finally, at the very bottom, is you—the Buyer.

In an LBO, the buyer’s “dividend” or “distribution” is the last thing to be paid. Some years, there might be nothing left at this level. This can be jarring for people used to a traditional salary.

So why do we do it? We do it because of Deleveraging. Every time the waterfall flows through Step 2 (Senior Debt), your debt balance decreases. Even if you don’t take a single dollar home in profit distributions during year one, your Net Worth is increasing by every dollar of principal you paid off using the company’s cash flow. You are using the business’s own energy to buy the business for yourself.

The “Covenant” Trap: Why Performance is Non-Negotiable

The waterfall is not just about having the cash; it’s about the rules of the game. Lenders set “Covenants”—financial guardrails that you must stay within.

If your “Debt-to-EBITDA” ratio gets too high, the bank can effectively “turn off the tap.” They can stop you from paying the seller, and they can certainly stop you from taking a draw. This is the “Leveraged” part of the LBO. It amplifies your returns on the way up, but it increases the pressure on the way down.

To the Acquisition Entrepreneur: The Path Forward

If this sounds intimidating, it should. It is a high-stakes game of financial engineering and operational excellence. But for those who master the waterfall, the rewards are unparalleled.

You are not just a “manager”; you are a Capital Allocator. You are overseeing a machine that takes revenue at the top and systematically satisfies lenders, rewards sellers, and builds your personal equity through the sheer force of cash flow.

The goal isn’t to have the most money at the top of the waterfall; it’s to ensure that the waterfall never stops flowing. If you keep the water moving, time will do the heavy lifting for you. In five to ten years, the debt will be gone, the seller will be paid off, and the entire waterfall—every single drop—will belong to you.

Have a great week!

Sebastian H. Amieva

www.sebastianamieva.com

The remarkable boom in M&A transactions that occurred in 2021 — a 2.5x increase in one year — begs the question: will we in our lifetimes see anything like it again? At least far enough in advance to prepare for the next wave of enthusiasm? The answer depends on what caused that historic bubble.

Cause & Effect

While speculators constantly debate and bet on the causes of short-term changes in stock market values, analysts are pretty confident they understand what drove the 2021 M&A boom.

A Perfect Storm of Six Compelling Causes

We list below what many consider to be the leading causes, most important first. Can the owners of mid-market companies expect to see any of these again?

Stimulus

Driven by unprecedented government spending and the beginning of the end of lockdowns, the economy began recovering from the Covid pandemic toward the end of 2020. This in turn led to increased market liquidity. That then opened the gates for “animal spirits” to roam the land seeking quick growth opportunities via M&A. (A situation probably not to be repeated any time relevant.)

Low Interest Rates

As part of the Fed’s energetic efforts to refloat the economy, it drove interest rates into the basement. (The Prime Rate dropped to 3.25% in March, 2020. It’s now 7.5%.) Cheap debt is catnip to PE acquirers who seek to expose as little of their own cash as safely possible when acquiring targets. (Interest rates rise and fall — we’ll see low rates again.)

Low Valuations

Pandemic fears also initially drove valuations way down, especially for companies trapped in lockdowns. Then acquirors gradually began to re-emerge after taking Baron Rothchild’s advice, “Buy when there’s blood in the streets.”

Even after valuations recovered, strong M&A activity continued, buoyed by rising economic optimism. (Wait for the next recession or depression to reduce valuations, though in the relevant future, they are unlikely to drop to the levels seen in the lockdown’s darkest days.)

Deal Backlog

In a related point, acquirers initially put hundreds of deals that were underway in the pandemic freezer till economic optimism returned. When they took them out to thaw, these pent-up deals added to the M&A surge. (The scale of the lock-down driven deal backlog is probably unique in our lifetimes.)

Piles of Dry Powder

By pandemic time, PE firms had accumulated record-high surpluses of “dry powder” (cash from investors) that they must deploy profitably before returning the capital. Said another way, cash was burning holes in their pockets. (A chronic condition of the modern PE industry. Expect growing pressure on PE firms to spend their limited partners’ cash.)

Strategic Buyer Realignments and Rising Deal Efficiency

Many larger strategics used the periods of inactivity imposed by lockdowns to navel gaze and reassess their strategies. That led to divestitures of non-core assets and acquisitions of businesses that better aligned with their new growth initiatives. (We think strategics will become increasingly competitive acquirers of mid-market targets through a combination of: 1) more efficient deal sourcing and processing, and 2) AI forcing wholesale reassessment of corporate strategy,)

Accelerated Tech Adoption

The enforced isolation of lockdowns accelerated adoption of online communications (teletech), payment processing (fintech), remote diagnosis and prescriptions (medtech), etc. All this demand made tech companies newly attractive targets. (The acceleration of tech industry deal closings continues. See my M&A Factoid #6: Hot Deal-Making Industries.)

Bottom Line

In the next 10 years or so we think it’s unlikely we’ll see a repeat of 2021’s astonishing M&A boom. However, we do believe we’ll see falling interest rates, rising “animal spirits,” more dry powder pressure on PE firms to buy, and greater deal competition from strategic acquirers. For mid-market sellers, the future may not be blinding but it’s certainly bright.

See ya in the inbox !

Sebastian Amieva

Investor / M&A Expert / Mentor

www.sebastianamieva.com

America’s M&A deal count went from a rather depressed 4,200 in 2020 to a manic 10,600 in 2021. That’s a 2.5x leap, the biggest on record. See my Factoid #2 for why.

But by 2023 it had collapsed 42%. What happened? Here’s what we (and some others, mostly McKinsey) think. Learning about what caused this crash may help you see the next one coming.

Thanks for reading Ryan’s M&A Factoid! Subscribe for free to receive new posts and support my work.

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Inflation

Pandemic lock-downs idled manufacturing and transportation labor, driving costs up while at the same time unprecedented government spending drove the dollar’s value down. This pincer movement jacked the official inflation rate from 1.4% in 2020 to 7% in 2021. (Many economists believe the real inflation rate exceeded 15%.)

Inflation and the operating disruptions caused by lockdowns diverted the attention of managers away from M&A-driven growth and toward cost-cutting and putting out fires.

Cost of Debt

Struggling to control inflation, the Fed pushed the Prime Rate from 3.25% in early 2020 to 7.5% by the end of 2022. Nothing kills the acquisition appetites of PE firms faster than expensive debt.

Perceptions of Global Risk

Brent oil prices jumped from $40/bbl in 2020 to $120 in 2022 due to a combination of Russia’s invasion of Ukraine and pent-up commercial energy consumption when lockdowns relaxed. The extreme volatility of energy prices and prospects of a greater war created uncertainty about the future. Despite Nathan Rothschild’s advice to invest while there’s blood in the streets, most investors hid in the basement.

Regulatory and Antitrust Clamp Downs

In 2022, FTC regulatory scrutiny delayed or blocked multiple large and visible would-be acquisitions​ like that of Activision Blizzard by Microsoft. In addition, the government made 70% more HSR (Hart-Scott-Rodino) antitrust filings in 2021 versus 2020​. Red tape enforcement both kills deals on the table and scares off those thinking about completing one.

Public Market Losses

The S&P 500 dropped 19% in 2022, another indicator of investor uncertainty. As public company valuations go, so go M&A valuations, causing sellers to baulk. Also, in an even clearer sign of depressed “animal spirits,” the number of US IPOs dropped from 1,035 in 2021 to 181 in 2022, this decline aggravated by globally uncompetitive US regulations​.

There You Have It…

The rockiest ride for M&A deal-making since deal counting began. Stay tuned for an upcoming Factoid where we’ll describe where M&A deal activity is right now.

Meanwhile, deals march on no matter what external factors are in play. That’s because the circumstances of company owners and their businesses are equally important factors.

See ya in the inbox !

Sebastian Amieva

Investor / M&A Expert / Mentor

www.sebastianamieva.com

I’ve spent the last decade working with private equity funds, independent sponsors, and

searchers on lower middle market transactions. My firm sits in the data room during diligence,

reviews quality of earnings reports, and helps sellers prepare their books before they go to

market.

Here’s what I’ve learned: most deals don’t blow up because of bad strategy or poor market fit.

They fall apart—or get re-traded at the eleventh hour—because basic accounting and tax issues

weren’t surfaced early enough. A perfectly good target with solid fundamentals can still trigger a

price chip or a broken deal if the financials don’t tell the story the seller thinks they do.

This article walks through the seven accounting traps I see most often when PE buyers,

independent sponsors, and searchers are evaluating targets in the $5M to $50M EBITDA range.

My goal is to show you what your transaction CPA should be flagging before you sign an

LOI—so you can protect your timeline, your IRR, and your reputation.

1. Aggressive Normalized EBITDA / Addbacks

The Trap: Sellers present an adjusted EBITDA number that includes addbacks for “one-time”

expenses, owner compensation above market, and discretionary spending. The problem? Some

of these addbacks don’t survive scrutiny in diligence, and the quality of earnings provider or

lender won’t accept them.

What It Looks Like: I worked on a deal last year where the seller’s CIM showed $3.2M in

EBITDA. They had added back $800K in “non-recurring professional fees” related to a lawsuit.

When we dug in, the lawsuit was ongoing, the fees were recurring every quarter, and the

buyer’s QofE provider rejected the addback entirely. The deal re-traded by half a turn.

What Your CPA Should Be Doing:

Pre-screen every addback in the CIM or management presentation for reasonableness

and supportability

Compare owner compensation to industry benchmarks using BLS or third-party surveys

Flag any addback that doesn’t have a clear narrative or documentation trail Prepare a “high,” “medium,” and “low” EBITDA scenario based on which addbacks will actually survive diligence

2. Working Capital Peg and Seasonality Disconnect

The Trap: The purchase agreement includes a working capital peg based on a trailing

twelve-month average, but the business has significant seasonality. The peg gets set too high or

too low, and the buyer ends up writing a check at close for working capital that evaporates sixty days later—or vice versa.

What It Looks Like: We supported a buyer acquiring a landscape services company. The seller proposed a working capital peg of $1.5M based on a TTM average. The problem? The business built up AR and inventory every spring, then ran lean in winter. At the July closing, working capital was $2.1M. The buyer delivered $600K in extra cash at close, only to watch receivables drop by $700K in Q4 as customers paid down and seasonal crews rolled off.

What Your CPA Should Be Doing:

Chart monthly working capital over at least 24 months to identify seasonal patterns

Recommend a normalized peg that reflects the actual level of working capital needed to

operate the business post-close

Propose a “catch-up” mechanism or escrow if the closing is happening at a seasonal

peak or trough Model what working capital will look like 90 and 180 days post-close under the buyer’s ownership

3. Quality of Earnings Gaps Between Sell-Side and

Buy-Side

The Trap: The seller hires a QofE provider to “get ahead” of diligence, but the buy-side QofE

firm comes to different conclusions about revenue quality, addbacks, or run-rate EBITDA. The gap creates tension, delays closing, and often triggers a price adjustment.

What It Looks Like: On a SaaS deal I reviewed, the sell-side QofE blessed $1.2M in annual

recurring revenue from a large customer on a three-year contract. The buy-side QofE dug into

the contract and found a cancellation clause with 90 days’ notice. They re-classified that

revenue as “at-risk recurring” and the buyer discounted the purchase price accordingly. The

seller felt blindsided because their QofE hadn’t flagged it.

What Your CPA Should Be Doing:

If you’re a seller, brief your QofE provider on any contracts with unusual terms,

cancellation rights, or performance conditions

If you’re a buyer, make sure your CPA is in the data room early to spot discrepancies

between the CIM, the sell-side QofE, and the actual financials

Look for “gaps” in revenue recognition policies, particularly around multi-year contracts,

deferred revenue, and customer concentration

Reconcile the seller’s adjusted EBITDA to the QofE-adjusted EBITDA line by line before

the LOI is signed

4. Sales Tax and Nexus Exposure Hiding in Plain Sight

The Trap: The target has been selling products or services across state lines but hasn’t

registered for sales tax in states where they have nexus. Post-Wayfair, this is incredibly

common in e-commerce, SaaS, and service businesses. The exposure can be six or seven

figures, and it’s often not covered by reps and warranties insurance.

What It Looks Like: We were brought into a deal involving a B2B software company with

customers in 40 states. The seller had only registered for sales tax in their home state. A sales tax consultant ran a nexus study and found the company owed back taxes, interest, and penalties totaling $450K across eight states. The buyer insisted on a dollar-for-dollar escrow

holdback, which delayed the close by three weeks and required the seller to re-cut the deal

terms.

What Your CPA Should Be Doing:

Run a preliminary nexus analysis during initial diligence, especially if the target has

remote employees, customers, or inventory in multiple states Order a formal sales tax review if exposure looks material Quantify the liability and determine whether it can be cured pre-close, escrowed, or insured Make sure the purchase agreement includes strong tax reps and a clear indemnity structure

5. Revenue Recognition Issues in SaaS and Recurring

Models

The Trap: SaaS and subscription businesses often recognize revenue upfront or on a cash

basis for internal reporting, but GAAP requires revenue to be recognized ratably over the

contract term. When a buyer’s CPA re-casts the financials, trailing revenue and EBITDA can

look very different from what the seller presented.

What It Looks Like: I reviewed a deal where the seller’s financials showed $4M in revenue for

the trailing twelve months. They were booking the full contract value when the customer signed.

When we re-cast revenue under ASC 606, actual recognized revenue was closer to $3.4M

because the contracts were multi-year and performance obligations hadn’t been met. The buyer

re-priced the deal based on the lower run rate, and the seller accused us of “playing accounting”

games.

What Your CPA Should Be Doing:

Re-cast historical revenue under GAAP (or the buyer’s preferred accounting framework)

before the LOI is signed Identify any contracts with multi-year terms, milestone billing, or variable consideration.

Calculate deferred revenue on the balance sheet and make sure the buyer understands

the cash vs. accrual timing difference

Flag any revenue that’s tied to performance, customer acceptance, or future deliverables

6. Owner Perks, Commingled Expenses, and

Related-Party Deals

The Trap: Owner-operated businesses often run personal expenses through the P&L—country

club memberships, family cell phones, vehicles for relatives, trips that are part business and part personal. Worse, the owner may lease property to the business, employ family members at

above-market comp, or have side deals with vendors. These issues muddy EBITDA, create tax exposure, and complicate the transition.

What It Looks Like: On a manufacturing deal, the seller was leasing the facility from an LLC he

owned personally. Rent was $20K per month, but market rent was closer to $12K. The seller

wanted to keep the real estate and continue the lease post-close. The buyer’s lender flagged it

as an above-market related-party transaction and required the lease to be re-negotiated to

market terms. That triggered a separate real estate appraisal, delayed the close, and burned

goodwill between both sides.

What Your CPA Should Be Doing:

Review the GL for any payments to related parties, family members, or owner-controlled

entities, Benchmark any related-party lease, service agreement, or compensation arrangement against market rates, Identify personal expenses running through the business and quantify them for addback

purposes, Draft a clean “go-forward” chart of accounts and expense policy for post-close

operations

7. Inconsistent or Missing Financial Systems and

Controls

The Trap: The target has been using QuickBooks, Excel, or a home-grown system that doesn’t have proper controls, audit trails, or month-end close processes. Post-close, the buyer can’t rely on the financials for reporting to LPs, lenders, or the board. Integration becomes a nightmare, and the CFO hire you planned to make in Month 4 becomes a Month 1 emergency.

What It Looks Like: We worked with a buyer acquiring a services business that had grown to

$15M in revenue but was still tracking everything in Excel. There was no formal close process,

no account reconciliations, and no documentation of accruals. The buyer’s finance team spent the first 90 days post-close just trying to build a baseline set of financials they could trust. It delayed integration, burned cash on consultants, and created friction with the seller who stayed on as CEO.

What Your CPA Should Be Doing:

Assess the quality of the accounting system and the monthly close process during

diligence

Identify gaps in account reconciliations, fixed asset tracking, prepaid schedules, and

accruals

Recommend a pre-close accounting cleanup or a post-close integration plan with clear

milestones

Flag any “key person” risk if the target’s controller or bookkeeper is the only one who

understands the books

Where a Deal-Focused CPA Adds Real Alpha

A transaction-experienced CPA doesn’t just review numbers. We shape the deal.

When we’re brought in before the LOI, we can help you set realistic EBITDA expectations,

structure a fair working capital peg, and identify issues that should be addressed in reps,

warranties, or escrow. We can also help sellers clean up their financials before they go to

market—so they’re not explaining away problems in the data room.

On the buy side, a CPA who knows how PE thinks can pre-screen targets, spot red flags early, and make sure your QofE provider, your lender, and your legal team are all working from the same set of facts. That’s how you avoid last minute surprises, price chips, and broken deals.

The best deals I’ve worked on are the ones where the CPA, the investment banker, and the

legal team are all aligned from day one. The worst ones are where accounting issues get

surfaced at the eleventh hour—and everyone scrambles to re-trade or walk away.

Let’s Talk Before You Sign the LOI

If you’re a PE fund, independent sponsor, or searcher evaluating a deal, bring in a CPA with

transaction experience early. If you’re a founder preparing for exit, get your financials cleaned

up and your story tight before you go to market.

The payoff isn’t just “clean books.

“ It’s smoother closes, fewer price adjustments, and deals that actually get done.

About the Author

Transaction-focused CPA with a decade of experience supporting private equity funds,

independent sponsors, and searchers on buy-side and sell-side M&A transactions in the

lower middle market ($5M–$50M EBITDA).

Specializes in quality of earnings reviews, financial due diligence, normalized

EBITDA analysis, and pre-sale accounting cleanup for founder-owned businesses

preparing for exit.

Works closely with investment bankers, deal attorneys, and PE operating partners

to surface accounting and tax issues early, protect deal timelines, and prevent post-LOI

re-trades

Have a great day !

Sebastian H. Amieva

For instance, founders of software companies succeed on average about half the time whereas only about 1% of newbie farmers do. (Success in this case is defined as whether the startup had been acquired, had acquired another company, or IPO’d.)

But by itself the industry in which entrepreneurs compete explains only about 3% of whether their venture will succeed or fail.

Indeed, researchers have identified another 13 key factors that together seem to account for the great preponderance of reasons why certain startups make it.

The chart below lists all 14 factors in declining order of predictive importance beginning with the heavyweight, the founder’s “Execution/Operational Efficiency.”

Here’s the same data with a visual rather than textual emphasis.

Now in the real world, each of these factors is affected by the presence of others. Any factor can combine with others to create outsized synergistic or multiplicative contributions to startup success.

For example, both variations in the personality types of a startup’s founders and the number of founders greatly multiply chances of success. Founder combinations like Leader (high openness and assertiveness), plus Accomplisher (high conscientiousness and extraversion), plus Developer (balance of traits) create favorable outcomes. At least when it comes to personality, diversity can prove valuable.

Yet, startups with three or more founders regardless of personality type are 2.6 times more likely to succeed compared to single founder startups.

Winning Personalities

The green rows in the first chart above describe certain founders’ personality factors which are together responsible for about 35% of startup success. See below for more detail on how those personality factors contribute.

BTW, personality types aren’t necessarily immutable - only about 50% of them are inherited. So if a would-be founder were aware of which critical characteristics were lacking, there may be a way to enhance them as well as reinforcing positive traits that are already present.

Next Step: Apply This Information

See my The 12 Characteristics of Successful Entrepreneurs for a user-friendly questionnaire that touches on many of the factors above and can help you determine how well the stars may align for a successful entrepreneurial life.

And see the following research sources for more detail on the key factors I described above:

• Execution and Operational Efficiency: Why Startups Fail - HBR

• Product-Market Fit: CB Insights - Top Reasons Startups Fail

• Market Timing: Bill Gross TED Talk

• Founder Industry Experience: Gompers on Serial Entrepreneurs

• Team Personality Diversity: Braesemann et al. Paper on Personality and Startup Success

• Personality Traits (Openness & Conscientiousness): Zhao on Personality and Entrepreneurial Performance

• Founder Networks / Social Capital: Anatomy of an Entrepreneur - Kauffman Foundation

• External Market Conditions: NBER - Economic Cycles and Startup Performance

• Luck / Random Events: Nassim Taleb on Randomness

• Regulatory Environment: Source: McKinsey on Regulatory Compliance

See ya in the inbox !

Sebastian Amieva

Investor / M&A Expert / Mentor

www.sebastianamieva.com

I’ve acquired 4 businesses, and NONE of those acquisitions began with me wiring my own capital…

The transaction was structured so the majority of the purchase price was funded through a combination of Seller Financing, Lenders (Alternative Finance Market), and Equity Partners.

The key was preparation long before the acquisition itself….

I defined clear acquisition criteria (industry, size, location, margins, and cash flow characteristics).

I built relationships with lenders who understood how to underwrite small business acquisitions.

I spoke with potential equity partners and established alignment on return expectations and timelines…

That way, when the right opportunity emerged, the focus wasn’t on whether the capital existed. It was on whether the business met the criteria..

From there, the structure did the heavy lifting…

- Seller financing reduced the upfront capital requirement and aligned the seller with the future performance of the business.

- Senior debt was supported by the company’s existing cash flow/assets.

- Equity partners filled the remaining gap and shared in the upside.

- As the debt is paid down over time, equity value accumulates..

Your role shifts from earning income through your own labor to owning and growing an asset…

This is the model that has been used in acquisitions for decades…It is not reserved for large funds. It is available to individuals who take the time to understand the acquisition process and prepare properly. It’s all about becoming a qualified buyer.

2026 can be the year you move from operating within a business to buying and owning one…

A well-structured acquisition can set you free…

Have a great week ahead!

Sebastian H. Amieva

Merger & Acquisition Expert | Investor | Mentor

P.S Book a call only if you’re serious about acquiring a business and are willing to invest time, focus and money into making it happen.

During this call we’ll see if our 1:1 Dealmaking Program is the right vehicle to help you acquire a profitable business.

Book here:

https://calendly.com/sebastianamieva/call

Earning the Big Bucks

We estimate that last year the owners of American mid-market businesses spent about $10 billion to close about 9,300 M&A deals. We therefore figure they paid fees to M&A advisors of about $1.1 million per deal.¹

So both $1,1 million and $10 billion seem like lots of money. Ever wonder if the investment bankers who initiated those deals are worth it?

And the Answer Is…

Sure, we get good feedback. People tell us that we work diligently and efficiently, manage fund-raising and M&A processes effectively, head off problems that trip up the less experienced, etc.

And of course there’s a flip answer to the question of whether advisors are worth it: the industry wouldn’t exist if they weren’t.

But being data-oriented guys, we’ve always been a bit uncomfortable about the paucity of hard evidence that our M&A services create value. That changed when we ran into a large-scale, heavily researched and repeatedly referenced academic paper titled Does Hiring M&A Advisors Matter for Private Sellers.

In short, the answer is clearly yes, hiring an M&A advisor does matter and in a strikingly positive way. “We find that private sellers that hire professional transaction advisors receive significantly higher valuation premiums.” To put a finer point on it, 25% higher.

Let Me Count the Ways

The study lists a number of ways advisors create value for sellers. Some of them are:

• Overcoming a negotiating disadvantage with bidders which tend to be larger and have more M&A experience.

• Providing buyers with key data about the seller. The absence of data creates uncertainty and therefore lowers target value.

• Attracting more buyers to the table through their pricey subscriptions to propriety databases and business relationships. More buyers increase bidding competition. Obscure sellers attract little.

• Presenting a compelling argument for the seller’s value and negotiating a greater share of the synergies created by the combination.

• Maintaining a brisk pace through the M&A process, thereby reducing the risk of deal-killing delays.

For a more comprehensive review of what M&A advisors do in sellside engagements, see my article How Do Investment Bankers Sell a Company?

A Caveat or Two

Of course, not all sellside advisors close the deal they were hired to manage, usually for two reasons: an ineffective advisor or an uncooperative and/or unsaleable company. Both these problems are much more common among smaller and troubled businesses, the very ones that most often find it difficult to attract a competent advisor.

The successful seller must also deduct from sale proceeds the cost of hiring an advisor. Yet it would have to be an extraordinary fee to surpass the average 25% increase in deal value that the seller gains by retaining one. For example, to nullify the value gain of a company that sells for $12.5 million rather than $10 million would require an advisory fee of $2.5 million.

See ya in the inbox !

Sebastian Amieva

Investor / M&A Expert / Mentor

www.sebastianamieva.com

Get “The Ultimate Guide To Increase The Value Of Your Business Before Selling - By Sebastian Amieva” Here

From Vague to Actionable: Pinning Down the Real Objection

Investors often give polite, vague reasons for passing: "You're a bit too early for us" or "It's not quite a fit right now". Your job is to cut through the politeness and get to the real, measurable reason.

Don't let them off the hook. Ask the simple, direct question that changes everything:

"I appreciate the feedback. So that I can learn from this, what is the single biggest milestone we could hit that would make this a 'yes' for you?"

This question does three powerful things:

It shows you're coachable, not defensive.

It forces them to be specific. "Too early" becomes "get to $10k in MRR." "Not a fit" becomes "prove you can sign two enterprise clients."

It opens the door for a future conversation. You now have their permission to follow up when you hit that exact goal.

The "If-Then" Framework: Turning Rejection Into a Roadmap

Once you have that milestone, it's gold. But it's worthless if you forget it. This is where a simple system becomes your superpower. In our Investor Playbook, we call it the "If-Then, Then-What" framework.

It's a column in your investor CRM where you document the promise.

IF we file our patents...

IF we onboard 500 active users...

IF we reduce churn below 4%...

THEN [Investor's Name] will invest [Amount].

This isn't just a note. It's a verbal contract. I had an investor tell me, "I'm not going to invest in you until you file your patents." That was a clear target. We went out, got it done, and I went back to him. Not only did he invest, but he was so impressed by the execution that he committed to a larger, milestone-based investment of $200,000.

Your Task: For every "no" you get, push for a specific milestone. Immediately open your CRM and document it in an "If-Then" format.

Keeping Investors Warm: The Monthly Update

Getting the milestone is one thing, but the journey to get there is just as important. You need to show investors that you are making steady, predictable progress.

This is where the monthly update comes in. It’s not spam. It's the proof that you’re consistently chopping wood. It builds trust, shows resiliency, and keeps your company top-of-mind, so when you do hit that milestone, they’re already primed to say yes.

Here is the exact template you can use. Send it on the same day every month (e.g., the 3rd) to show consistency.

[COPY & PASTE EMAIL TEMPLATE]

Subject: [Your Company Name] // July 2025 Update

Hi everyone,

A quick update on our progress at [Your Company Name] for the month of July.

TL;DR:

We hit a new MRR high of [Dollar Amount], growing [X]% month-over-month.

We successfully launched [New Feature Name], which is already being used by [Y]% of our active users.

Our key focus for August is [State your #1 priority for the next month].

KPI Dashboard:

MRR: $[Amount] (+[X]%)

New Customers: [Number]

Customer Acquisition Cost (CAC): $[Amount]

Cash in Bank: $[Amount]

Runway: [Number] months

Highlights & Wins This Month:

Customer Win: We officially onboarded [Big Customer Name], who came to us after leaving [Competitor Name].

Product: We shipped [Key Feature], which addresses [a specific pain point]. Early feedback has been incredible.

Team: We welcomed [New Hire Name] as our new [Job Title]. Her experience at [Previous Company] will be a huge asset.

Challenges & Learnings:

We tested a new marketing channel on LinkedIn that didn't perform as expected. We learned that our audience responds better to [Different approach], so we are reallocating that budget to a more proven channel. It was a cheap lesson in the grand scheme of things.

What's Next:

Our engineering team is now focused on building out our [Next Big Feature], with an expected launch in mid-September.

Our sales focus for August is to land two more customers in the [Specific Industry] vertical.

Thanks for all your support.

Best, [Your Name]

Sebastian H. Amieva

I'm training people to build an international movement of qualified business buyers because the world needs people to take over businesses.

That's my mission. www.sebastianamieva.com

Why PPAs (Power Purchase Agreements) and synergies decide the outcome

This renewable energy acquisition looked attractive at first glance.

Assets in operation. Revenues contracted. Growth optionality.

But the real value was locked behind PPA renegotiation and post-acquisition synergies that were far from automatic.

The existing power purchase agreements were sub-optimal. Pricing mechanisms didn’t reflect current market dynamics. Flexibility was limited. Upside was capped.

Renegotiating them required credibility, scale, and operational leverage, none of which existed pre-acquisition.

Post-close, they did.

By combining portfolios, standardising operations, and presenting a stronger counterparty profile, we were able to reopen conversations that had previously been closed.

This is a critical CFO insight.

Value creation often happens after the deal, not at signing.

But only if the acquisition is structured to enable it.

We focused heavily on integration discipline: aligning operations, consolidating procurement, optimising maintenance, and creating a single commercial narrative.

The result wasn’t just cost savings.

It was optionality.

Better PPAs. Improved financing terms. Stronger long-term valuation.

M&A doesn’t end at completion.

For CFOs, that’s where it truly begins.

Here’s what you’ll learn in the next 3 minutes:

How to prove your capital request is a multiplier for growth, not just a crutch for survival.

The key metrics investors actually care about (LTV:CAC, Churn, Burn) and the golden rule for a healthy business model

How to build a believable exit strategy that’s backed by data, not just dreams.

Let’s get into it 👇

Most pitch decks fail not because of their design, but because they avoid the hard questions. Founders obsess over fonts, colors, and one-liners, but overlook the logic that underwrites an actual investment decision.

This week, I’m walking you through the three questions every founder should answer, before they ever hit “present”. Whether you're raising a pre-seed round or preparing for Series A, these principles will sharpen your pitch, clarify your model, and give investors what they’re really looking for: conviction.

Question 1: Is Capital a Multiplier or a Crutch?

Money doesn’t solve broken business models. Capital is a multiplier only when you’ve already proven something works. Ask yourself:

Are we funding existing traction or trying to find traction?

What have we already validated with customers?

Will this money unlock scale—not just survival?

A Strong Answer Sounds Like This:

“We’ve proven that for every $1 we put into our Google Ads funnel, we get a customer with a lifetime value (LTV) of $10. Our growth is currently capped by our budget. This capital will allow us to scale that proven channel from $5k/month to $50k/month, unlocking predictable revenue growth.”

Pro tip: Add a slide in your deck labeled “Why Capital Now?” that outlines exactly what funding unlocks, backed by real data (KPIs, pilot growth rates, CAC/LTV shifts).

Question 2: Do You Speak the KPIs That Actually Matter?

Founders love to talk about vision, passion, and product features. Investors listen for something else entirely. They have a love language, and it's spoken in metrics. If you’re not fluent, you’re not getting a second meeting.

CAC (Customer Acquisition Cost): What does it cost you to acquire one new paying customer? This is the fundamental cost of your growth engine.

CAC = Total Sales & Marketing Spend/Number of New Customers Acquired

LTV (Lifetime Value): How much gross profit will one customer generate for you over their entire relationship with your company?

LTV=(Average Revenue Per Customer)×(Gross Margin %)×(Customer Lifetime)

The golden rule of a healthy SaaS or D2C business is an LTV:CAC ratio of 3:1 or higher. This tells an investor that for every $1 you spend on acquiring a customer, you get at least $3 back.

Churn Rate: What percentage of your customers are you losing each month or year? High churn is a hole in your bucket. No matter how much water (new customers) you pour in, you’ll never fill it.

Monthly Churn Rate=(Customers at Start of MonthCustomers Lost in Month​)×100

Question 3: Is Your Exit Strategy Believable?

This is where most founders lose the room. "We’ll be acquired by Google" is not a strategy, it’s a dream.

Craft your exit narrative using:

Market comparables (Who acquired who, for how much, and why?)

Path to acquisition triggers (Revenue thresholds, user base, patents, distribution)

Investor ROI logic (How does your cap table + growth yield a real return?)

Sebastian H. Amieva

Get “The Ultimate Guide To Increase The Value Of Your Business Before Selling - By Sebastian Amieva” Here

A reverse merger happens when a private company acquires a public company, usually a “shell company” (public but inactive). Instead of doing an IPO, the private firm “reverses” into the public one—becoming publicly traded faster and cheaper.

Why companies choose it:

✅ Faster than an IPO (weeks/months vs. 12–18 months)

✅ Lower costs (no heavy underwriting fees)

✅ Access to public capital markets quickly

✅ Often used by startups, foreign companies, or firms in high-growth sectors

Here’s The Reverse Merger Process (Simplified)

1. Identify a Public Shell Company

Usually listed but inactive, minimal operations.

Example: A dormant company still listed on NASDAQ/OTC.

2. Due Diligence

Private company reviews shell for hidden liabilities (lawsuits, debts, compliance issues).

3. Agreement & Structure

Private company shareholders exchange their shares for control of the public entity.

The shell may issue new shares to private owners.

4. Change in Control

Private company management takes over.

Company name, ticker symbol, and strategy are rebranded.

5. Capital Raise (Optional)

Often, a “PIPE” (Private Investment in Public Equity) is used to raise fresh cash.

I love them! Reverse mergers are a shortcut to the public markets—faster, cheaper, and sometimes a lifesaver (or second chance).

They’ve worked wonders for DraftKings, Burger King, and Virgin Galactic—but they also carry risks if due diligence isn’t watertight.

Hope this inspires you to start doing Reverse Mergers and thinking BIGGER!

Sebastian H. Amieva

Mergers and Acquisitions Expert | Investor | WorldTraveller

First, Who Cares?

An earnout defines the conditions under which an acquirer may make additional payments to a seller when the seller achieves certain performance goals post-close. In sum, they allow acquirers to lay off the risk of overpaying for the target.

Conversely, earnouts give the seller a shot at making more off the deal than the buyer would otherwise be willing to pay at close. As such, earnouts can close valuation gaps between buyer and seller that could otherwise kill deals.

In 2023, about a third of private digital tech M&A deals featured an earnout and that amount has been trending up in concert with rising perceptions of political, economic, and technological risk.

So it pays sellers to acquaint themselves with the mechanics of purchase agreement earnouts for two reasons: 1) They’re now rather commonplace; 2) As you will see, they usually work to the buyer’s benefit.

The good news is that there are things sellers can do to mitigate buyers’ earnout advantages, especially by leveraging the services of a competent M&A advisor.

Your Handy Factoid Earnout Chart

To add some context to the above factoids:

• Today, earnouts range from 15% to 20% of total deal value on average. That assumes full payout and, as we shall see, that’s a big assumption.

• Driving two-thirds of earnouts is seller revenue. The remainder splits between EBITDA and A) Other financial statement metrics; B) Various operating milestones, e.g., R&D or client maintenance goals. Know that the further down the income statement an earnout metric lives, the more vulnerable it is to post-deal changes and manipulation.

• While the average earnout period is two years, the range is between six months and five years. Whatever the duration, it’s typically bounded by the seller’s willingness to stay on the job.

• Only 55% of sellers realize any earnout compensation. The fault is due to seller overconfidence in the heady rush toward close, and to post-closed disputes over ambiguous terms or even buyers’ moving the goal posts. However, such moves may not be deliberate. An example of an unintentional move is when the parent company is compelled to increase corporate overhead across the board, with the knock-on effect of reducing the subsidiary’s (the seller’s) earnout driver, EBITDA.

• Of the 45% of sellers receiving earnout compensation, roughly half, or 25%, earn the max.

Three Ways to Avoid Earnout Disappointment

First, familiarize yourself with details on common earnout practice so you’re aware of divergences from the norm. Second, read about how to skirt the earnout pitfalls nearly certain to sow disappointment.

Accomplish both these objectives by visiting my Understanding Earnouts: An Entrepreneur’s Guide.

Third, retain a competent M&A advisor like Kuhn Capital. We not only guard sellers’ interests in earnout design and negotiation, we can also reduce the earnout’s share of overall seller compensation and increase the amount of cash. We do that by introducing buyer competition into the M&A process.

Sources

RSM US: Earnouts gain traction in tech deals bridging valuation gaps (2024)

Whiteford Law: Private Company M&A - Earn-Outs: Gravy on Top? (2025)

Forbes: Understanding Earnouts In Mergers And Acquisitions (2021)

JW.com: Anatomy of a Deal – Earnouts in M&A Transactions (2020)

Harvard Law: Earnouts Update 2023

Mostly Metrics: Your Complete Guide to Earnouts (2024)

WinSavvy: Tech M&A Deal Volume Trends (2025)

See ya in the inbox !

Sebastian Amieva

Investor / M&A Expert / Mentor

www.sebastianamieva.com

As we look ahead to 2026 and beyond, digital transformation and artificial intelligence (AI) are set to play an even more prominent role in shaping the mergers and acquisitions (M&A) landscape. A recent Deloitte survey of 1,000 corporate and private equity (PE) leaders revealed that 86% of corporate and PE firms have adopted generative artificial intelligence (GenAI)in their M&A workflows, and 65% of them did so within the past year. The rapid pace at which GenAI is being adopted in the deal process reflects a broader recognition that advanced technologies can significantly enhance how deals are sourced, evaluated, and executed.

“According to Gartner®, The use of AI will have a profound impact on improving the speed, efficiency and overall performance of M&A processes.” These aligned findings underscore there is a significant shift underway in how deals are planned and executed, with digitally enabled teams leveraging AI for greater speed and accuracy. And dealmakers are just getting started.

Among the responses to Deloitte’s survey, 83% indicated they have invested $1 million or more in the technology, specifically for their M&A teams. Spending is expected to continue rising —54% of private equity respondents and 58% of corporate respondents anticipate modest increases, while 24% and 28% —respectively — foresee significant investment expansion.

That leaves a central question facing M&A professionals: Where can dealmakers realize the greatest near-term ROI from GenAI, and which parts of the M&A lifecycle can benefit most from GenAI investments? Forward-thinking dealmakers are evaluating which stages of the M&A lifecycle — be it due diligence, valuation modeling, integration planning, or post-merger optimization — stand to gain the most from these innovations. Many are finding that GenAI offers the most immediate value when applied to targeted, well-defined use cases such as automating the review of legal documents, accelerating data analysis, or identifying hidden synergies within large datasets.

However, even amid widespread enthusiasm for GenAI, senior executives and M&A leaders are moving ahead with a measure of caution. There is a strong focus on prioritizing robust governance structures and risk management frameworks to ensure that GenAI adoption complies with regulatory standards and ethical principles. Leaders are also creating cross-functional teams to guide the responsible integration of these tools and manage potential risks related to data privacy, cybersecurity, and market volatility.

As the race to adopt GenAI in M&A accelerates, organizations should consider four key strategic decisions as they look tostrengthen their GenAI capabilities and move beyond initial experimentation to drive measurable impact:

1. Stand up or strengthen sensing capabilities using internal and external resources to keep a pulse on AI and GenAI activity, considering direct and indirect competitors and partners.

2. Recast the M&A strategy by taking into consideration how AI and GenAI might affect existing value chains and opportunities to capitalize on disruption and drive greater growth and value creation throughout the portfolio.

3. Identify and invest in expertise that can help validate and amplify AI and GenAI opportunities and that brings a blend of commercial, operational, and technical perspective.

4. Pilot and adopt high-priority GenAI use cases to accelerate value realization, focusing on those with the greatest potential impact across the enterprise and aligningwith overall organizational objectives.

Taken together, these actions provide a practical framework for organizations seeking to navigate the complexities of GenAI adoption in M&A. Organizations that succeed will likely be those that harness technology to create measurable value while remaining vigilant about oversight, security, and long-term strategic alignment.

Source: Gartner Newsroom, Gartner Announces Top Trends in M&A for 2024, November 2023.

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

I created this M&A framework and I would love to share via here.

1. Attract

👉 Identify and attract the right targets or buyers.

• Build deal flow pipelines (brokers, bankers, proprietary outreach).

• Position yourself as a credible buyer or attractive seller.

• Focus on strategic/financial fit.

Question: Who are the top 50 companies that would truly move the needle if we acquired or merged with them?

⸻

2. Assess

👉 Deeply analyze opportunities.

• Conduct financial, strategic, and cultural due diligence.

• Benchmark valuation, risks, synergies, and competitive positioning.

• Ask not just “Can we buy it?” but “Should we buy it?”

Question: What risks or blind spots could destroy value in this deal?

⸻

3. Align

👉 Ensure alignment across all stakeholders.

• Align leadership vision, culture, and incentives.

• Negotiate terms that balance risk/reward fairly.

• Confirm that both sides share a roadmap for integration.

Question: Does everyone at the table see the same future after this deal?

⸻

4. Acquire

👉 Execute the transaction effectively.

• Structure financing (cash, debt, equity, earn-outs).

• Finalize contracts: SPA, LOI, regulatory approvals.

• Manage communications with employees, investors, regulators.

Question: How can we structure this deal to protect downside while maximizing upside?

⸻

5. Assimilate

👉 Post-merger integration = where most deals fail.

• Merge systems, processes, and cultures.

• Track synergy realization (cost cuts + revenue growth).

• Maintain clear leadership and accountability.

Question: How will we measure and sustain value creation 12–36 months post-close?

Grab our exclusive $297 Business Acquisition Bundle and get:

• Business Valuation Calculator

• Deal Analyzer

• 750+ Online Deal Sources

• Financial Modelling & DCF Templates

• Questions to the Seller Form Everything you need to find, evaluate, and win the right deal—fast.

Limited-time bundle. Get It Today Here: www.sebastianamieva.com

When most people think about M&A, they think about spreadsheets.

Valuation models. Synergy calculations. Legal due diligence checklists.

But here’s the reality: deals rarely fail because of the math.

They fail because the right questions were never asked.

After years of seeing deals succeed—and many collapse—I’ve learned that the real edge comes from looking where others don’t.

Here are five underrated questions every acquirer should ask, but almost no one does.

1. Why is the seller really selling?

The stated reason—retirement, “moving on,” or “new opportunities”—is often just the surface.

The real reason might be hidden stress, declining industry economics, or a looming competitive threat.

If you don’t understand the seller’s true motivation, you’re flying blind. A seller running from a sinking ship won’t tell you the waterline is already rising.

2. What happens if the top 2 employees leave after closing?

Most financial models assume the business is a machine that keeps running once purchased. But in reality, people—not assets—are the real engines.

If your two key employees walk away, do you still have customer loyalty, technical know-how, and cultural glue?

If not, the deal you thought you bought may vanish overnight.

Qualified Business Buyers build retention strategies into the deal before it closes.

3. Would I still want this business if I couldn’t use leverage?

Debt makes almost any acquisition look better. It can turn an average company into a “great” IRR.

But if you strip away the leverage and the deal still looks attractive, you know you have something real.

If not, you’re just papering over mediocrity with financial engineering—and that story rarely ends well.

4. Does this deal bring me closer to the life I want—or into a bigger cage?

Acquisitions aren’t just financial—they’re personal.

Many buyers end up trading one kind of job for another: instead of freedom, they buy themselves 80-hour weeks, endless firefighting, and sleepless nights.

Before signing, ask: Is this business aligned with the life I’m trying to build—or am I just chasing a bigger paycheck?

5. What’s the one risk everyone is quietly assuming away?

Every deal has a “silent killer.” Customer concentration. Regulatory risk. A fragile supply chain. An industry that looks stable but isn’t.

The risk no one talks about is the one most likely to blow up the deal. That’s why Qualified Business Buyers spend as much time stress-testing assumptions as they do analyzing numbers.

Qualified Business Buyers don’t just do diligence.

They ask uncomfortable questions—the ones most people would rather avoid.

Because in M&A, the worst mistake isn’t paying a little too much.

It’s buying something you never should have touched in the first place.

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