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Today’s Rundown

• Seller financing isn't a loan

• Managing blue-collar team members in ETA businesses

• How much EBITDA margin is “enough”

• Digital marketplace SMBs

• 2 deal / launch announcement

• 7 new career opportunities

Database Overview

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Weekly Highlights

• Kris Schumacher, an experienced investor, on why seller financing isn't a loan - and why thinking it is might kill your deal:

  • Seller financing in sub-$10M deals typically includes a seller note covering ~10–25% of price, sometimes 50%+ in riskier cases; it’s best viewed as deferred purchase price tied to intangibles, not a cash loan

  • Because it isn’t bank debt, “unthinkable” loan terms are normal and fair: subordination, small holdbacks, performance-based offsets for busted reps, standby/interest-only periods, DSCR-based payment pauses, and conditional forgiveness

  • Economic logic is price and risk sharing: buyers gain flexibility; sellers often secure a higher headline value (and sometimes tax benefits); the debt wrapper mainly provides remedies if things go sideways

  • Practical implication is adjustment when sold value proves lower than represented - for example a key customer leaves post-close - since the note is effectively a bet on realized business value, not principal the seller lent

  • Underwriting signal matters: a willing, lightly protected seller note reads as confidence and helps approvals; over-lawyering with heavy collateral, PGs, or bulletproof protections reverses the signal, tightens conditions, delays, or kills the deal

• A. J. Wasserstein, a Yale professor, published a paper on managing blue-collar team members in a search fund–acquired business:

  • Blue- and pink-collar teams are the face or backbone of most ETA targets; investing in them and treating them with dignity improves service quality, retention, and profits while meeting an ethical duty

  • Many new CEOs stumble over common blind spots such as the Excel illusion, the human-capital fallacy, the life-happens disconnect, the expertise trap, and the playbook problem, which erode trust and execution if unaddressed

  • Key practices are keeping the payroll promise, leading from the front, practicing tough empathy with accountability, communicating simply with visible metrics and recognition, and building systems that document SOPs, create training ladders, and equip techs well

  • Avoid traps including safety complacency, administrative overload that taxes technicians, shiny new systems without user buy-in or training, and premature scaling before people, process, and culture are stable

  • Frontline trust is the growth engine; show up, listen, respect the craft, and sequence change thoughtfully to cut employee and customer churn and to lift profitability and ultimately IRR and MOIC

• Christian Koelen, a MBA graduate exploring the ETA space, shared his theoretical thoughts on how much EBITDA margin is “enough” in a search fund / ETA deal:

  • The required EBITDA margin in a search fund or ETA deal must be high enough to cover debt service and leave sufficient CFADS (Cash Flow Available for Debt Service) for growth, based on a formula that incorporates capex, working capital, taxes, interest, amortisation, leverage, and valuation multiple

  • Higher capital intensity, leverage, or entry multiples increase the minimum EBITDA margin needed, making financial modelling essential to assess whether a business can sustainably manage both debt obligations and reinvestment needs

  • Rather than focusing solely on profitability, it’s crucial to evaluate whether the company’s EBITDA margin meets the threshold dictated by its capital structure and sector dynamics to ensure long-term viability

• Karl Hunger, an experienced operator and entrepreneur, launched selvendo, a digital marketplace for the sale of small and medium-sized businesses:

  • Succession in the SME sector still often fails - lifelong businesses find no successors, traditional M&A doesn’t fit, and interested buyers can’t get access

  • selvendo offers a simple, digital platform built for small firms - sellers can create professional sale materials within hours, and selvendo proactively approaches suitable buyers

  • Buyers use the platform free of charge with clearly structured, comparable listings

Deal / Launch Announcements

• 🇩🇪 Konkordia Unternehmensnachfolge, a search fund managed by Wolfram Krauss and Daniel Missethon, acquired KKD, a fleet service provider for corporates (link)

• 🇸🇪 Black Fox Invest, a search fund managed by Kristoffer Ekelund acquired Tollco, manufacturer of water damage prevention products (link)

Career Opportunities

• [ETA] Investment Associate | Tembo Search Partners | Frankfurt / Hamburg (apply)

• [PE] Investment Intern | Summa Equity | Munich (apply)

• [PE] Investment Intern | Summa Equity | Stockholm (apply)

• [PE] Investment Intern | Inflexion | Frankfurt (apply)

• [PE] Investment Intern | Elvaston Capital Management | Berlin (apply)

• [PE] Value Creation Intern | Elvaston Capital Management | Berlin (apply)

• [PE Asset] M&A Associate | PER | Dusseldorf (apply)*

_*Headhunter

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