This article is based on a live conversation on Start, Scale, Exit, Repeat, a Startup Club show hosted by Colin C. Campbell and Michele Van Tilborg, featuring Alexis Sikorsky, business advisor and author of Cashing Out.
Most founders spend years building a company and weeks thinking about how to sell it. That gap is where the money gets left on the table.
Alexis Sikorsky has been on both sides of the deal. He built and sold his banking software company to private equity in 2019, and now advises founders on how to exit with maximum leverage. What he shared in this conversation challenges almost everything the standard entrepreneurship playbook says about selling to private equity.
“You sold your car to a guy and you don’t like the way he’s driving it. Not your problem anymore.”
-Alexis Sikorsky
You Are Not Selling to a Villain
The most common complaint Colin hears about private equity is that they bought the company and then changed everything. Alexis had a sharp response to that.
“You sold your car to a guy and you don’t like the way he’s driving it. Not your problem anymore.”
Once you sign, the company is no longer yours. The founders who struggle most post-acquisition are the ones who did not accept that before the deal closed, not after. If maintaining control is non-negotiable for you, private equity is probably not your buyer. If you can make peace with becoming a minority shareholder and an employee of the firm, you may find PE gives you more runway than a strategic buyer ever would.
“Usually when you sell to a strategic, you end up being fired,” Alexis said. “PE at least needs you to run the company. That’s not their business.”
Strategic Buyers Do Not Always Pay More
The assumption that strategic buyers deliver higher valuations than PE is increasingly outdated, at least below the $150 million deal range.
At that size, you might have three to five potential strategic acquirers in the market for your company. You have an essentially unlimited number of PE funds. If you know how to speak PE language and run a competitive process, the valuation gap disappears, and in some cases inverts.
“If you are a little bit professional and knowledgeable in terms of how to sell to private equity, the difference tends to diminish,” Alexis said. “And at some point you get better deals from PE.”
The Nominal EBITDA Nobody Explains to You
Private equity does not buy a multiple of your EBITDA. They buy a multiple of your nominal EBITDA, which is what the business would earn next year, all else being equal.
Here is a simple example. You fired someone in November. Their ten months of salary still sits in your EBITDA for the year. But PE removes that from the calculation because that cost will not exist next year. Nominal EBITDA is almost always higher than reported EBITDA.
If you do not calculate this yourself before entering negotiations, PE will calculate it for you and keep the difference. That is one of the clearest examples of what PE is not telling you.
Dress the Bride Before You Go to Market
Alexis calls the pre-sale preparation process dressing the bride or dressing the groom. It is a list of specific financial, operational, and positioning actions that make your company desirable before any PE firm ever opens a spreadsheet on you.
The work starts two years before you want to sign. Not six months. Not when you feel ready. Two years.
That timeline exists because you need to build the short list of target funds, test your deck on PE firms in other geographies who have no stake in the deal, refine your story based on their feedback, and then approach your actual targets with a competitive process already in motion.
“Send your deck to PE firms that are not potential buyers but are close,” Alexis advised. “There is no incentive for them to lie to you. And you do not waste a shot.”
When you do go to market, put your own valuation in the deck. Do not wait for PE to anchor the number. That is your leverage, and most founders give it away before the first meeting.
Three Things to Do Before You Are Ready to Sell
Alexis gave Magnificent, a solopreneur in the audience, a framework that applies to any founder thinking about an exit in the next ten to fifteen years.
First, identify the tasks only you can do. Take a week and log every action you take. Then separate the ones where you are genuinely irreplaceable from the ones where you just have not hired the right person yet. The list of truly irreplaceable tasks is always smaller than founders expect, and it should shrink as the company grows.
Second, build systems before you need them. Process documentation, clean financials on a monthly basis, clear procedures. This is boring work that creates real enterprise value.
Third, know your growth path. Are you selling more to existing customers, expanding to new markets, or building through acquisition? PE wants to see where the next phase of growth comes from. If you cannot answer that question clearly, the valuation reflects it.
Do Not Hire a Broker for a Sub-$150 Million Deal
This was the most contrarian position Alexis took, and he acknowledged it would cost him friends.
Investment banks and brokers are paid by you but incentivized by the buyer. They do more deals with the PE firms you are pitching than they will ever do with you. When their interests conflict, they resolve it in favor of the relationship that keeps paying them.
“You pay them and they end up being on the side of the buyer very often,” Alexis said.
For smaller deals, the value a broker adds is largely findable through LinkedIn and ChatGPT. The deck work they do is typically outsourced to consultants you end up paying for anyway.
Colin added the counterpoint from his own experience: ultimately, deals close when two decision makers trust each other. During a difficult IPO process, Colin bypassed his bankers and called the lead investor directly. One honest conversation about price, and the deal closed.
The Question You Have to Answer Before Everything Else
Before the EBITDA, before the deck, before the buyer list, Alexis starts every founder engagement with one question.
What is your number? How much do you need in the bank to never have to work again if you choose not to?
Most founders cannot answer it cleanly. They have built a company without knowing what finish line they are running toward. That ambiguity is what lets PE set the terms instead of you.
“If you cannot get where you want to go in five years,” Alexis said, “then don’t go there. Go somewhere else.”
Your identity is not your company. It is entrepreneurship itself. Understanding that distinction is what makes it possible to exit, start again, and build more.
