When Private Equity Calls: A Guide for Advisors
Private equity has officially moved downstream. PE-backed aggregators that once targeted billion-dollar firms are now writing offers for practices with $150 million to $500 million in AUM, and many advisors are receiving these offers without having gone looking for them. In this episode, David Grau Jr, MBA. and Kristen Grau, CPA, CVA, CEPA cut through the headlines to explain what a PE-backed deal actually looks like from the inside.
The conversation covers who these buyers are, how they structure offers, and why the classic idea of “selling and retiring” often does not fit the PE model. David and Kristen walk through financial normalization, recurring revenue debates, P&L preparation, and the often-overlooked reality that time kills deals. If you have ever been approached by a PE-backed firm, or think you might be, this episode gives you the framework to evaluate the offer clearly.
SRG works exclusively alongside sellers in the M&A process, helping advisors get the right offers in front of the right buyers. Whether you received an unsolicited offer last week or you are thinking three to five years ahead, now is the time to understand the landscape.
- PE-backed aggregators vs. direct PE: Direct PE investment goes to large enterprises (typically multiple billions in AUM). PE-backed aggregators have already taken that investment and are deploying it through acquisitions of firms as small as $150M to $250M in AUM.
- The seller profile is shifting: PE buyers want firms they can grow. The new seller profile is 50 to 70 years old — someone still willing to work and grow, not ready to retire in 12 months.
- Big multiples come with conditions: PE buyers may quote 10x to 12x earnings, but achieving that figure typically requires staying on for three to five years and hitting specific growth targets above current trajectory.
- Normalization can shrink your effective multiple: If you plan to leave post-sale, PE buyers add replacement comp back into expenses — often 25% to 35% of revenue — reducing normalized earnings and the effective payout.
- Know your numbers: Experienced buyers will cross-reference reports and look at client-level data. Sellers who do not know their numbers give buyers leverage to negotiate down.
- Clean your P&L before going to market: Remove owner-discretionary expenses, get onto a consistent tech stack, and track your financials quarterly for three to five years before selling.
- Best price or best terms — rarely both: A high purchase price often means more back-end risk and longer commitments. A lower cash deal with clean terms and a shorter transition may serve some sellers better.
- When you get an offer, pause: PE buyers are disciplined and experienced. They will create urgency. Pause, shop the offer, and call SRG before signing anything.
