playbook: micro private equity
I was sitting in an Econ 101 lecture when I had the biggest epiphany of my career.
And no, it wasn't about supply & demand curves—I wasn't paying attention.
Instead, I was "taking notes" while secretly scrolling through Forbes' latest billionaire rankings.
You see, up until that point, I had the same dream of many emotionally suppressed children—to become a corporate lawyer.
But while scanning the Forbes 400 list, something horrifying dawned on me: there were ZERO lawyers on this list. Nada. How would I become a billionaire?! (until that point I thought I had it in the bag).
What I did noticed was that a lot of people in finance were running mysterious operations called "hedge funds" and "private equity." Intrigued, I went down a rabbit hole.
Back then (2013), the path to Private Equity (PE) was pretty straightforward:
Sign your life away to an investment bank at 22—helping sell businesses while grinding 100+ hour weeks
Get promoted, cut your teeth on deals, then make the coveted switch to the "buy-side" at a PE firm like Blackstone.
After missing enough ballet recitals and surviving a divorce - you would make it to Partner. Where you would finally get real ownership and "good money"
Appealing, right?
Well, it turns out there's a MUCH better way to break into PE without sacrificing your life. You can build real financial freedom and even help your local community.
This concept is called Entrepreneurship Through Acquisition (ETA)—essentially building your own Micro PE firm.
Here's how to build your own micro PE empire, change your life, and possibly even future-proof yourself against the AI revolution.
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you don’t need a billion-dollar fund - you can buy $1-$10M businesses yourself
For decades, private equity has been a closed-off club. The traditional path requires:
A prestigious degree from a top-tier school.
Gruelling years at an investment bank.
An eventual transition to a junior role at a PE firm, where the grind continues.
The process filters out everyone except those willing to sacrifice their health, relationships, and sanity. There’s also a 50/50 chance you might adopt a skincare routine like Patrick Bateman 😬
But here’s the thing: you don’t need a billion-dollar fund—or even millions—to get started in private equity.
By focusing on smaller deals—acquiring businesses valued between $1M and $10M—you can build a Micro PE firm that generates significant cash flow, builds wealth, and creates opportunities to positively impact local communities.
“But I don’t have much moneeeeyyyyy?”
I hear you - but I also have a solution. Most entrepreneurs in Micro PE don’t start with much money. What they do have, however, is something even more valuable—time.
Do you know what wealthy people trade money for? Time.
Acquisition entrepreneurs, also known as “Searchers,” raise capital from these wealthy folks, secure bank financing, and leverage creative deal structuring to acquire businesses with minimal upfront capital. In return, they take on the operational risk and effort, allowing them to own a larger share of the business.
Let’s dive into the specific tactics and tools you can use to make this work for you.
how one acquisition entrepreneur used micro PE to create a $100M+ exit
Micro private equity operates on a simple yet powerful premise: you acquire and operate smaller, profitable businesses, typically in niche industries overlooked by larger PE firms. These are companies with stable cash flows, loyal customer bases, and motivated sellers (often retiring owners).
This approach opens the doors to:
Lower Competition: Big PE firms don’t touch deals under $10M.
Accessible Financing: Seller financing and SBA loans make acquisitions possible without massive upfront capital.
Control and Freedom: You’re the owner, not a disillusioned middle manager at some giant firm, trapped under florescent lights and staring at stained ceiling titles.
Community Impact: Supporting local businesses means keeping jobs and wealth in the community.
case study: stealth monitoring
Take Stealth Monitoring, a small security and monitoring firm acquired by an entrepreneur using the Micro PE model. Over time, it scaled into a national leader and was eventually sold to GardaWorld for hundreds of millions of dollars. What started as a single small acquisition turned into a life-changing exit.
Anecdotally, I’ve met hundreds of entrepreneurs like this throughout my career as an M&A Advisor, and let me tell you—most of them aren’t exactly the "Einsteins" of our generation if you catch my drift. But they embody founder fitness - they are resourceful, scrappy, and willing to bet on themselves.
This is all great - but let’s get a bit more specific on how you can start your micro PE firm.
billionaires are masters of leverage - here’s how to use it to buy your first business
One of the smartest moves acquisition entrepreneurs—or "searchers"—make when raising capital is using step-up equity to their advantage. Here’s the play: instead of putting all their own money into buying a business, searchers raise the majority of the capital from investors. In exchange, those investors get equity in the deal. But here’s the kicker: the searcher negotiates a step-up in their ownership to reflect the operational risk and effort they’re taking on.
Here’s an example: a searcher raises 90% of the deal’s capital from investors and chips in just 10% themselves. On the surface, you’d think they’d walk away with only 10% of the business. But with step-up equity, they can negotiate a structure where they own 20%, 30%, or even more after the deal is done. Why? Because they’re the ones sourcing the deal, running the business, and often signing personal guarantees on the debt—the real work and risk lie with them, not the investors.
Investors are typically fine with this setup because they know the searcher’s hustle is critical to making the business a success. They bring the cash, the searcher brings the sweat equity, and everyone wins when the business grows. This strategy allows searchers to start with minimal upfront investment while still securing a significant ownership stake—setting the stage for long-term wealth creation.
Step-up equity isn’t just about raising capital; it’s about leveraging your role and efforts to maximize your upside. It’s one of the best tools searchers have to align incentives, attract investors, and retain control over the businesses they’re buying.
Now that we have the capital problem out of the way, let’s focus on the bigger problem for most searchers: market positioning and focus.
millions of baby boomers are retiring - most buyers offend them - here’s how to win deals even as a nobody
Sorry for calling you a nobody—I’m sure you’re very special.
But you know who doesn’t care about that? The retiring Baby Boomer who’s already received 15 emails this week from firms with names like Oak Green Capital, all promising to "preserve his legacy" when they buy his business.
The biggest challenge you’ll face as an acquisition entrepreneur isn’t finding deals—it’s getting access to great deal flow. Don’t worry, bad deal flow is going to hit you in the face like an unmanned fire hose.
For context, there are over 65,000 listings on BizBuySell at any given time. On top of that, millions of businesses owned by Baby Boomers will need new ownership by 2035.
This wave of Baby Boomer retirements has created a lot of noise—and brought a flood of buyers into the space. Here’s how you can actually stand out in the crowd:
most buyers are afraid they will miss out on deals by being too specific - but the opposite is true
As an M&A Advisor, here’s the type of email I typically get from acquisition entrepreneurs outlining their buying criteria:
Minimum of $1M EBITDA
High profit margins
Low CAPEX
Big barriers to entry/competitive moat
Recurring revenue
Low customer concentration risk
General Manager or CEO in place
The owner is willing to finance a big portion of the deal
Oh wow, thanks, Johnny. That’s such a unique approach—because it’s not like EVERY SINGLE PERSON IN THE WORLD WOULD BUY THAT BUSINESS.
Excuse the sound of my blood boiling, but this outreach strategy makes zero sense and automatically lands your email in my trash bin.
You know what actually makes you stand out? Being hyper-specific. Here’s a counter-example:
Industry: Fire-alarm testing companies
Geography: Southeast U.S.
Size: $750K-$2M EBITDA
Specialization: Strong reputation for servicing commercial properties
Seller Profile: Owners nearing retirement, open to a 6-month transition period
Value Add: Buyer has previous experience scaling a home security business from $1M to $6M in revenue
Now that stands out. Why? Because it’s clear, actionable, and shows you’ve done your homework. Hyper-specific criteria don’t limit your options—they actually increase the likelihood that someone reads your email and thinks, “I know the perfect business for you.”
Even better—if you’re open to 3-5 different industries, create 3-5 hyper-specific versions of your criteria and send those emails to different brokers. Now, you can get known as the ‘fire-alarm testing guy’ to Broker Bob or the ‘property insurance gal’ to Broker Sally.
Stay tuned for part 2 of this series, where I’ll dive into deal-sourcing strategies tailored for Micro PE firms.
don’t bullshit the seller - tell your authentic story.
I see it all the time—the smooth-talking buyer finally gets a meeting with the owner and launches into a rehearsed monologue about legacy, how much they “love the industry” (spoiler: they really just like the money), and how they won’t change a thing, fire anyone, or rock the boat.
It might sound good in theory, but here’s the thing: most sellers can see right through that script if it’s not authentic.
You know what actually works? Simply telling your story—even if that story is as straightforward as:
“Hey, I hated my corporate job, I wanted more control over my life, income growth opportunities, and the idea of buying and running businesses excites me. So far, your business looks really interesting to me.”
Most business owners take immense pride in their entrepreneurial journey, and many—unless they’re particularly jaded—love the idea of helping out a new or emerging entrepreneur. Taking this honest, human approach not only builds trust but often works wonders.
I’ve seen sellers make jaw-dropping concessions for buyers they genuinely liked, going as far as structuring deals heavily in the buyer’s favour. On the flip side, I’ve seen them blow up deals over minor issues simply because the buyer came off as insincere or arrogant.
Authenticity and likability go a long way—don’t underestimate them.
3 steps to start building your Micro PE firm
Sold on the dream? Here are three actionable steps to kick off your journey and start building your Micro PE empire:
Define Your Buying Criteria
Get hyper-specific about the type of business you want to acquire. This may require some soul searching—start by asking yourself, “What type of work has sparked joy and felt more like play than work in my career so far?”
Identify an industry where you can add value or already have experience. Set clear financial metrics (e.g., $500K-$2M EBITDA) and outline your geographic focus. The more targeted you are, the easier it is to stand out and attract the right opportunities.
Keep an open mind during this process. Buying a business is like rifling through your neighbour’s trash (which I obviously never do)—one person’s trash might be your treasure.
2. Build Your Investor Network
Start cultivating relationships with potential investors. These could include high-net-worth individuals (rich people), family offices (super-rich people), or small private investors (likely businesspeople in your existing network). Be prepared to pitch your vision—explain how you’ll use their capital to generate returns while taking on the operational risk yourself. Finding a target industry that is adjacent or related to your background can help with strengthening investor confidence.
Learn Deal Sourcing and Structure
Build relationships with business brokers, explore online deal platforms like Axial or BizBuySell, and develop a direct outreach strategy to connect with business owners. At the same time, familiarize yourself with financing tools like SBA loans, seller financing, earn-outs, and step-up equity structures. These will become your secret weapons for closing deals with minimal upfront capital.
Stay tuned for the next instalment in this series—Deal Sourcing 101 for Micro PE Firms—where I’ll break down the strategies, tools, and tactics you can use to find great deals and stand out in a crowded market.
every second counts.
This is part 1 of a series on building your own micro PE firm. You can read part 2 - deal sourcing in micro PE: building your pipeline here
Pssst - mystery reader,
If you’re enjoying my writing, you’re going to love my internet mail. It’s this groundbreaking concept where I send you cool stuff to your inbox each week—pretty revolutionary, right?
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