Hey Searchfunder Community,

I’ve been involved in a number of LBO's over the last few years, successfully acquiring businesses and using those deals to create strong returns. It’s been a great journey, but I’ve recently started shifting my approach in a new direction that I think some of you might find interesting—securing equity in businesses without buying them outright.


Here’s why:

After completing several LBO's, I realized that while full acquisitions gave me control and ownership, they also came with a lot of responsibility and capital requirements. It got me thinking about other ways I could leverage my expertise to gain ownership stakes in businesses without needing to go through the full acquisition process each time.


This led me to start negotiating for equity in businesses I was helping—not as a buyer, but as a strategic partner.


What I’ve Been Doing:

Instead of focusing solely on acquiring businesses, I’ve started identifying companies that have specific, pressing problems—whether in marketing, operations, or scaling. Rather than going in with the goal of buying the company, I’m offering to solve those problems in exchange for equity.


Here’s a basic outline of how I’ve approached it:


Finding the Right Businesses:

I look for businesses that have urgent problems—issues that are costing them serious money or preventing them from scaling. Often, these are businesses that are undervalued, but rather than trying to buy them, I position myself as a partner who can solve the problem and take equity.


Structuring the Deal:

I’m structuring these deals where I get equity tied to specific outcomes—for example, a percentage of profits once we hit certain revenue targets or an equity stake in exchange for turning around a particular part of the business. It’s a performance-based equity model that benefits both sides: they get a strategic partner without having to sell the business, and I get a share of the upside.


Building Long-Term Value Without Acquisition:

By doing this, I’ve been able to build equity positions without having to raise capital for a buyout or take on debt. It’s given me exposure to more businesses than I would have been able to acquire through traditional LBOs, and it allows me to stay flexible with my time and investments.


Why This Shift?:

While LBOs have been incredibly rewarding, this model of negotiating for equity without acquisition has allowed me to:


- Reduce Capital Outlay: I’m not having to raise funds or take on debt with every deal.

- Diversify Ownership: By partnering with multiple businesses instead of acquiring just one, I’ve been able to build a portfolio of equity positions in businesses across different sectors.

- Focus on Strategic Impact: Instead of managing every aspect of the business like in a traditional acquisition, I can focus on solving critical problems where my expertise is most valuable.



Is Anyone Else Doing This?



I’m curious if anyone else in the Searchfunder community has tried this approach—negotiating equity partnerships rather than buying businesses outright. If you’ve done this, how did you structure the deal? What were the biggest challenges you faced in securing equity without going for a full acquisition?


I’m happy to share more details about my process, including how I’ve structured performance-based equity agreements and the types of businesses I’ve been targeting. Let me know if this is something you’d be interested in discussing!