Buy the businesses you've been watching, with the capital, team and credibility sellers say yes to.
For owners and acquisition entrepreneurs whose growth plan runs through acquisitions. As a public company, you get more access to capital, people and sellers, and stock becomes one more way to pay. You can close deals private buyers can't, and build something far larger than one business could grow on its own.
Why buy instead of build.
Building a business is hard. Buying one is a lot easier, and it lets you grow in big steps instead of small ones. Google, Microsoft and Amazon all grew in big steps through acquisitions, and the same logic works for a company a fraction of their size.
A public company has more ways to win those deals: capital and lenders to fund the cash, a team to run what you buy, the credibility that brings sellers and brokers to you, and stock that owners can price and sell over time.
Pick your starting point.
One business, ready for more
Use what you own as the platform for the next acquisitions, instead of starting over each time.
A few deals done, lenders tapped out
Seller notes and bank debt only stretch so far. Public companies can raise equity, borrow against audited numbers and offer stock as part of the price.
Building a holding company
Structure it so each deal adds the capital, people and credibility that make the next one easier.
Why private buyers lose good deals
A private company can only pay with cash. That caps every acquisition at your balance sheet and your borrowing, and it puts you up against buyers with deeper pockets on the one dimension where they always win.
It also makes you a hard buyer to say yes to. An owner selling the business she spent 30 years building wants certainty, sensible tax treatment, and often a share of what comes next. Offer her a note from a private company and she becomes a creditor of a business she can't monitor, with no way out. Most sellers decline, and they're right to.
Offer her shares in a public company and the conversation changes. She can look up the price every day, sell some and hold some, and stay in if she believes in the combined company. You haven't made the deal richer. You've made it acceptable.
What opens up when you're public
Acquisitions get easier when the other levers are stronger: capital to fund deals, people to run what you buy, and credibility that brings sellers to you. Stock is one more way to pay.
Capital for the deals that need cash
Raise on your terms, or borrow against audited financials a lender can actually underwrite.
People to run what you buy
Stock with a market value attracts the operators and integration leaders a growing group needs.
Deal flow that comes to you
Business brokers and sellers' advisers keep lists of credible buyers. A public acquirer with a currency and a stated strategy goes near the top of those lists. Brokers would rather bring a deal to a buyer that can act and close, and a public company with access to capital can do both.
Announce one acquisition, and brokers and owners of similar businesses start to call.
Sellers who can say yes
Owners nearing retirement who would never take private paper will take shares they can price and sell over time.
More ways to pay
Stock, cash, notes, preferred shares and earnouts tied to results or your share price, in whatever mix gets the deal done. A private buyer negotiates with one variable; you negotiate with several. Some deals need no new common stock at all: non-convertible preferred shares and secured seller notes can cover the price.
There is a saying that you can have your price or your terms, but not both. A public company has more terms to offer. Outside investors can fund the cash portion of a purchase, either directly into the business being acquired or through a special purpose vehicle, so you bring little of your own cash to closing and share the ownership. A preferred share can cover part of the price and give the seller an income. A note paid to the seller over time can cover another part. A seller will consider a preferred share or a note from a transparent public company; they rarely would from a private company nobody knows.
Costs that shrink as you grow
The cost of being public is largely fixed. Every acquisition spreads it across more earnings until it's a rounding error.
The arithmetic of buying as a public company
Private businesses usually sell for a modest multiple of EBITDA. Public companies are often valued at a higher one. That gap is the engine.
Take a public company with $2 million of EBITDA, valued at 15 times: $30 million, or $1.00 a share across 30 million shares. It buys a private business earning $1 million for 5 times EBITDA, $5 million, It sells 5 million new shares to long-term investors at $1.00 and pays the seller in cash.
Before
$2.0 million of EBITDA, 30 million shares, valued at $30 million, $1.00 a share.
After
$3.0 million of EBITDA, 35 million shares, valued at $45 million, $1.29 a share.
The company sold $5 million of stock and added earnings the market values at $15 million. Every existing shareholder owns a smaller percentage and a larger amount of value.
The math only works with discipline. The market won't always apply your multiple to what you buy, sellers often discount thinly traded stock or want a premium for taking it, integration costs come out of the earnings you bought, and multiples can fall as you grow. Done carelessly, the same math destroys value just as fast. That's why the playbook leans on raising capital, both debt and equity, to fund acquisitions, with stock as one part of the price rather than all of it.
From a $3.5 million listing to a $240 million sale.
When this company went public, it had about $1.5 million in revenue and a starting valuation of $3.5 million. The founder raised about $100,000, mostly to build the shareholder base it needed to start trading. Over the next seven years he made three acquisitions as a public company. One added technology. One did not work, and he closed it. The third took hold. He sold the original business, put the proceeds behind the one that was working, moved the company up to Nasdaq, and sold it for $240 million in cash.
The business that sold was not the business that went public. The listing is what let him buy his way into it. It’s our best outcome, not a typical one: what happens after a listing depends on how the founder executes.
revenue when the company went public
starting valuation
growing as a public company
all-cash acquisition
What it takes to do this well
The companies that compound through acquisitions share four things, and none of them is the listing:
Sourcing
The best deals come from relationships built before the owner was ready to sell: knowing the 20 or 30 businesses that would fit, and talking to their owners for years.
Discipline
A walk-away price set and written down before negotiating, because your own reasoning will move once you want the deal.
Integration
Someone whose job is absorbing each business, with the authority and time to do it.
Pace
A company with the money for four deals a year and the capacity to absorb one should do one. Do the first one smaller than you want to.
We help you build all four, and we'll tell you plainly when a deal you love isn't worth doing.
Is this you?
A good fit if you
- Own an operating business, or have one under contract
- Work in a fragmented industry with owners approaching retirement and few natural buyers
- Can name the businesses you'd buy first, and why
- Want to build a group over the next 5 to 10 years, not flip one company
- Run clean books, or could get them audit-ready within a few months
Probably not a fit if you
- Don't yet own or have under contract an operating business. Start there (the Meraki Dealmakers library covers buying a first business), then talk to us.
- Want to buy anything available, in any industry, as fast as possible
- Don't want outside shareholders, a board or public reporting
How it works
Four steps, in order. Every step is optional and agreed in writing before it starts. You can stop after any step and owe nothing further.
Plan: The Four Levers Program
Every engagement starts here. Four one-to-one working sessions and a written playbook built around your company: a straight verdict on whether going public belongs in your plan now, later or never; which route and which market; your first raise, outlined; and a 90-day action list. About 30 days. $10,000, fixed, and nothing owed after. Read about the program.
Raise
If the plan calls for a raise, we prepare the company and coach you through it: corporate structure, cap table, financial records, governance, the offering, investor materials, data room, compliance and an outreach plan. Then you run a private placement from your own network, sized to your next milestone at a valuation you can support. $15,000, fixed, with 90 days of support, and only if we both think you're ready.
List
With the capital and shareholders in place, we manage the process of becoming a public company by whichever route fits, most often a direct listing on the OTC market. We bring in and coordinate the auditors, securities lawyers and other specialists, and keep the whole sequence moving. A monthly fee plus equity, agreed in writing, so we do well only if you do.
Build
Once you're public, ongoing strategic advice whenever we're needed: acquisitions, hiring with stock, partnerships, capital strategy, investor communication, and moving up to a larger exchange when it makes sense. A monthly fee plus options. This is where most of the value gets created.
What it costs
What it costs. Every engagement starts with The Four Levers Program: four one-to-one working sessions and a written playbook, about 30 days, $10,000 fixed, with nothing owed after. If the plan calls for a raise, Raise-Ready is $15,000, fixed, with 90 days of support. Listing, and the advisory work after it, are on a monthly fee plus equity, agreed in writing before each step starts. You can stop after any step and owe nothing further.
Third-party costs are additional and paid directly to those providers: accounting, audit, legal, stock exchange, transfer agent and filing fees. We'll estimate them once we've seen your financials. As a guide, they typically run:
- Direct listing:$300,000 to $500,000
- Reverse merger:$400,000 to $600,000
- IPO:$600,000 or more, before underwriting commissions
You don't need this money sitting in the bank. In almost every case, the private placement is structured so you and your team can raise capital from your personal and professional networks to cover these costs, often with growth capital on top, and sometimes capital for acquisitions too. Your own outlay is the plan and the preparation. The people who already know you pay for the rest. We’re paid the same whether you do one deal or ten, so our advice on each one is about whether it’s right.
If your raise falls short, you can stop there. You owe nothing further, and no equity has been issued to us.
You won't be doing this alone
I'm Joel Arberman. A few months after my first company went public, a private equity group called out of nowhere. They didn't want to invest. They wanted us to buy one of their portfolio companies. We paid entirely in stock, with no cash, and the deal brought us revenue, profit and a team that knew how to run an operating business. That was when I understood what a public company's stock could do.
Before that I was an equity analyst in New York and, at 22, a partner at a 700-person investment bank. In more than 30 years across Wall Street, Bay Street and my own companies, I've taken 17 companies public, several of them my own, and advised on acquisitions, financings and the strategy that connects them.
Questions acquirers ask
Do I need to own a business before I start?
Yes. The playbook works for a company with operations to build on. A company with no business whose plan is to buy companies it hasn't identified can be treated as a blank check or shell company, which brings heavy restrictions. If you're still searching, start with the first acquisition.
I financed my business with an SBA loan. Does that matter?
It may. Some loans carry terms affecting changes in ownership or structure. Raise it in our first conversation, and check the terms with your lender and counsel early.
Won't paying in stock dilute me?
Yes, by design. The question is whether each deal adds more value than it costs. Bought carefully, you own a smaller share of a much more valuable company. Bought carelessly, you don't, which is why discipline matters more than speed.
What if a seller only wants cash?
Some will. Being public gives you more ways to fund cash deals too: raising on your terms, or borrowing against audited financials. Many sellers prefer a mix of cash for certainty and stock for upside.
Will the businesses I buy need audits?
Often, for larger deals. A material acquisition can require audited financial statements for the business you're buying, so we look at the condition of a target's records early.
Is this an IPO?
Usually not. Most companies list through a direct listing on the OTCQB and can move up to Nasdaq or the NYSE later.
How do public companies pay for acquisitions?
Mostly with cash raised from long-term investors, plus seller notes, preferred shares and some stock. Stock is one part of the price, not all of it. See how small public companies use stock for acquisitions.
Why do sellers prefer a public buyer?
A public buyer has audited numbers, a market price and access to capital, so its notes, preferred shares and stock are easier for a seller to trust.
Can an acquisition entrepreneur use a public company as a holding company?
Yes, once it owns an operating business to build on. The public company then raises capital and adds acquisitions on the same platform. See the ETA playbook.
What are the risks of buying with stock?
The market may not apply your multiple to what you buy, sellers may discount thinly traded stock, and integration costs reduce the earnings you bought. Discipline matters more than the math.
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Be the buyer sellers can say yes to.
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