Dependent Sponsor
67 posts
Dependent Sponsor
@DependntSponsor
Raising vibes, not capital. Ex-PE learning blue collar the hard way. Not a search fund
Katılım Şubat 2026
134 Takip Edilen16 Takipçiler
When I started @Albrecht_Law, it was because I was massively inspired by the sponsors who were risking everything to bet on themselves.
These are people with young children and stable jobs who wanted to build something their children would be proud of.
I have been inspired by each one.
Every day I get to represent them is an honor.
People like Caroline and Nat Sabatt, who had a baby the week before closing an HVAC acquisition. I remember working on their deal, seeing the kids running around on Zoom, and being clearly reminded why we are doing this.
These truly are like the homesteaders of the Wild West. They set off into the unknown; they encounter massive and unexpected challenges along the way, but if they can get through each challenge, they create a rewarding life for themselves and their families.
The challenges are huge, as I said in the article, what you gain in EBITDA multiples, you pay for in brain damage. But those who succeed are the ones who can consistently overcome challenges.
@miriamgottfried captures this perfectly. It is not the cold financial structuring, but the humans that are the real story. Each person in this article comes alive, and you get a glimpse into who they are and what moves them.
This is a beautiful explanation of why I jump out of bed every morning and feel privileged to do this work.
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@HockJohannes To be honest, we need a hard recession to remind people that personal guarantees are real and the SBA will take the keys to your house if things go south.
The COVID ZIRP environment created a bunch of winners, and everyone thinks they can replicate this strategy
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In light of another WSJ search fund article dropping, here's a hot take. I don't think a 5x EBITDA deal with 25% equity is worth it for the searcher.
It doesn't sound like much, but the difference between 10% and 25% equity almost cuts your economics IN HALF, while your bankruptcy risk barely goes down (more on that below).
In my opinion, self-funded search has always been one thing: you take a ton of risk (lever up with PG) and if you survive, you are set for life on a single deal in about 5 years.
That's what the math works out at 4x EBITDA and 80-90% ownership. It doesn't work out at 5x EBITDA and <50% ownership. The latter is a bad economic trade for the searcher.
You'll hear every investor tell you to overequitize. Yes, that does derisk the deal, but the real winners are the investors here. What good does a deal do you that still has a ton of risk but you don't have homerun upside on the other side. The potential to make $1-2mm over 5-7 years with a ton of risk is not a good trade for the average searcher. Most of you can just keep a $200-400k job with no bankruptcy risk.
For the deals I have seen gone bad, having 75% debt instead of 90% would not have saved them. In small businesses when things go bad, it's often binary. So all that extra equity you raised barely reduces risk and but gives a ton of the upside to investors.
6 months of fixed cost is plenty of cash in the bank. If it takes more than that, the business likely wasn't going to make it anyway. And yes, someone will bring up a scenario where a business was saved by having 7 months. Doesn't matter, when you are going down this path you are playing the average odds. If bankruptcy is an impossible risk for you, then don't get SBA debt. You're better off getting paid carry at that point.
TLDR I don't think signing the PG is worth it if you don't have the chance to be done if your deal works out.
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@GrantHensel How do you deal with all the employees leaving after they cash out
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A searcher we invested in bought a business from an ESOP, and is buying another (also an ESOP). They're surprisingly attractive targets for searchers because:
ESOP = Employee Stock Ownership Plan, meaning the employees own some or all of the company.
As a result:
1) Every employee gets to vote on whether to sell to you. The vote isn't binding, the ESOP has a trustee who ultimately decides, but it gives you amazing data on whether the team is in favor of the transaction. And you get to meet everyone pre-close, without question.
2) The business has to get a valuation every year so the ESOP knows what it's worth. This tends to lead to clean books and reasonable valuation expectations.
3) An ESOP is created when the founding owner sells some or all of their interest to the ESOP, which often involves a large seller note. This creates a comfort with seller notes (these two deals had ~35% and ~50% seller notes)
4) The transactions require specialized legal counsel and are somewhat complex. This scares away a segment of buyers and reduces your competition.
Anyone else looked at or done ESOP deals? Curious to hear other pros/cons you've seen.
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>PE group gives great offer to my Seller, Client.
>Pitches big Rollover (Second Bite, blah, blah).
>I ask for details on Rollover.
>Rollover is actually Common Units.
>I ask for Parent LLC Agreement.
>Rollover is actually profits interest.
>I review waterfall and participation threshold.
>Rollover Units starts participating after the company has tripled in value at the bottom of the waterfall, then, only partially participates, until value is higher (and more senior equity can be raised on top).
>Seller becomes less excited about the Second Bite will leave him hungry.
>>We accept a different LOI.
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JUST IN: Mamdani urges New Yorkers to wait until early morning or late at night to run appliances like dishwashers & laundry machines in order to ease strain on the power grid.
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@DudeWhoInvests Is it really a rug pull if it shot up 60% and people had several days to sell (if they wanted to)?
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SpaceX $SPCX down 9% today.
Rug pull incoming…
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Dependent Sponsor retweetledi
if @elonmusk paid 100% of his net worth ($1.4 trillion) as a tax it would only cover federal government spending for 77 days. this isn’t a tax problem…
Elizabeth Warren@SenWarren
If Elon Musk paid my ultra-millionaire wealth tax, we could pay for child care for all three and four year olds in America.
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I sincerely believe you don't want to compete against someone who quit their high paying $300-400k/year job at a prestigious firm and is now all in on acquiring a traditional niche $1-5M EBITDA business while preparing to have a newborn at home.
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I was going to charge for this, but f*** it.
My team just put together a 40+ page report of everything we’re seeing right now in the small biz economy.
What’s inside:
→ Real market data on SBA lending
→ Business buyer demand trends
→ Data on the ownership succession gap
→ An inside look at what small businesses are doing with AI right now
We’ve spent months doing hundreds of surveys and interviewing dozens of owners to put this together.
Now it’s yours for free.
Just:
1. Like this post
2. Comment “SMB”
And I’ll send it over.
(Make sure you’re following me so I can DM you.)
GIF
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@PEoperator What type of biz? Has to be something project-based right? Construction?
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Met with a company yesterday-
No website, no signage, no marketing
$90M sales / $18M EBITDA
2 guys started it 5 years ago
Absolutely insane and goes to show just how much opportunity there is out there.
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It's official.
MicroStrategy, $MSTR, is now facing its biggest unrealized loss in history, at -$10.8 billion.
In other words, after 6 years of buying Bitcoin, the company is now down -17% on its position.
By comparison, the S&P 500 is up +116% over this same timeframe.
Since MicroStrategy sold 32 Bitcoin at $77,135 per coin, their positions has lost -$11.8 billion in value.
This puts MicroStrategy's stock, $MSTR, down -77% since its record high.
Bear market is an understatement.
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Dependent Sponsor retweetledi
Whenever a financial advisor reaches out to try to make me their client, I ask them to walk me through how $10 of depreciation impacts the three financial statements.
Gets them every time.
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Dependent Sponsor retweetledi
🇺🇸 WARREN BUFFETT: "I can end the U.S. deficit problem in 5 minutes."
“You just pass a law that says that anytime there’s a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.”
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"My controller showed up drunk today and took a bunch of pills" isn't a class taught at Harvard Business School.
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@blueprintsmb22 This is absolutely ridiculous. Someone’s Aunt Suzy that wrote a $10k check into a garage door biz is now barred from investing? Give me a break. The SBA needs to get its head out of its ass
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I’ve heard that the SBA is enforcing this. I’m aware of a recent SBA bankruptcy where a relatively high profile platform that invests in these deals now can not invest in any self funded deals reliant on SBA financing anymore x.com/dennis_unrein/…
Dennis Unrein | SMB PE@dennis_unrein
Breaking: SBA may be applying new rules to its $30B+ annual 7(a) loan program with formal guidance still pending. Source: Forbes. Rules Change: SBA Bank Lenders and Investors reporting new rules. Penalties that used to apply only to the borrower may now apply to all owners, including passive investors under 20% Before: Only the guarantor was penalized if a deal failed. Now: Passive investors may also be flagged if a prior SBA loan they were tied to defaulted. Even a late payment on a prior SBA loan can trigger a flag. Example: A $25K investor tied to a past issue can block a $2M deal Implication: If any investor in your deal has a past issue in an SBA deal, your entire deal can get blocked. A single minority investor can now stop a deal from closing. Retroactive: Being applied retroactively back to any prior SBA Loans or deals. Investors may be judged under rules that did not exist when they originally invested in prior business buyer. Rules Remain Unclear: No official SBA guidance. Bank lenders and investors are interpreting behavior in real time. Article reported by Forbes. How Many Deals Raise Money? Estimated 6 out of 10 ~60% of small business buyers rely on outside investors (friends, family, small checks) Takeaway: This isn’t about the business this is about who is in your cap table. One bad investor can significantly delay your deal - and you will not find out until they are apart of your application with the SBA. Workaround: Ask investors up front if they have any exposure to bad SBA Loans. SBA Lenders are removing equity investors that are exposed to bad deals, so be prepared with backup investors if possible. Disclaimer: Not legal or financial advice. Review SBA guidance and speak with lenders directly. Formal rules still in flux.
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JUST IN: Artemis II crew experiences issues with Microsoft Outlook on their way to the Moon, asks ground crew for assistance.
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@dealflow_guy This is a quick way to get shown 0 deals by the broker
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Had a conversation with a Searchfund founder a couple of years ago.
Very proud he negotiated a buyside fee down to 1%. No retainer.
He shut down his Searchfund after 2.5 years of unsuccessful searching last month.
Darden MBA negotiation skills not employed correctly.
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Nearly 1 in 4 private equity associates (including senior associates) receive carried interest, with a median of 42bps.
(per wallstreet360.co data)
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@BoringBiz_ To add to the health comment- sleep is criminally underrated in American society. Have to make it a priority to make it far in the game - otherwise, lack of it will kill you
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If you want a successful career, two things matter more than anything else
> health
> who you marry
I have seen far too many people who have had to step aside from their demanding line of work because of health problems
These are folks who had all the IQ and work ethic in the world and were clearly in line for being promoted and eventually ending up with a top seat at their company
The only problem is that they never took care of their health. Stress related issues build up over time. Lack of exercise takes a huge toll on your body as you get older
In the end, that was what killed their progress
Similarly, who you marry has a very outsized return on both your happiness and professional trajectory
Being with the wrong person is a distraction that will eat away at your mental sanity. In some cases, it can lead to losing half your net worth that you worked hard for.
In the worse cases, you will lose the same relationships that you previously had with your children
Having a partner who supports your pursuits and stands by the tough times will do more wonders for your career than anything else in the world
It is probably one of the most underrated weapons in the world when it comes to professional and personal progress
Focus on these two over everything else. The rest takes care of itself with enough time
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I have spent the last 8 years building a list of 200+ business ideas.
Sweaty, low risk, great businesses.
Comment "Ideas" and I'll DM you the list.
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