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Episode Summary
You decide it’s time to sell. You Google “who buys companies like mine.” You get a broker’s website, three letters from PE firms asking for businesses between $250K and $3M of EBITDA, and a vague sense that somewhere out there is the right buyer at the right price. Nobody can show you the whole market because the whole market doesn’t exist in any one place. That’s the gap Peter Lehrman has spent the last decade trying to close. Peter is the founder of Axial, a private platform connecting buyers and sellers of lower middle market companies ($5M–$100M in revenue), and they’ve moved over $25B in transaction value across more than 2,000 deals. Peter and I got into why “proprietary deal flow” is just code for hustling at trade shows, the three pieces of information every seller needs about a buyer (active intent, capacity to close, reputation), why a professional buyer only needs to close one deal a year to keep the lights on (and what that does to seller leverage), and the difference between intrinsic value and Milestone 6 — Transaction Value when human psychology enters the room. The line that stuck with me: you can build a business worth $40M and blow it by only inviting one buyer to the table.
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## Top 10 Takeaways- There is no Zillow for your business, and that asymmetry is where most sellers lose leverage.
- The three things you need to verify about any buyer: active intent, capacity to close, and reputation.
- A professional buyer only needs to close one deal a year. You only get to do this once.
- Cold letters from PE firms are not deal flow. They are evidence the market has no inventory system.
- If your books are half in QuickBooks and half in Excel, you have cleanup work before you have a sale.
- The internet eliminated the excuse for being unprepared. Read the checklists before you fly the plane.
- You can double your revenue and not move the value of your business one dollar.
- Your private company has no daily price. It has the price the buyers at the table that day will pay.
- Approach one buyer and you have a data point. Approach fifty and you have a market.
- Intrinsic value is the math. Transaction value is human psychology. Both belong at the table.
Sound Bites
“100% of the companies on the planet that I’ve ever met are underpriced. Meaning in some corner of the business, there’s something you could charge more for.” (@TBD) — Peter Lehrman
“If you’re a professional buyer of businesses, you only need to close one sale a year. You need to make one transaction a year. And so they don’t necessarily need to build a repeatable process by which to identify acquisitions. They really kind of just need one year.” (@TBD) — Peter Lehrman
“You could build an incredibly valuable business that has great intrinsic value and then blow it completely based upon how you approach the market of buyers.” (@TBD) — Peter Lehrman
“When you’re an entrepreneur and you’re getting ready to sell your business, you are like a pilot getting in a plane. You want to have good checklists.” (@TBD) — Peter Lehrman
“This is your deal. You have to take ownership over this. You can’t totally delegate all this because you will be unhappy somehow.” (@TBD) — Ryan Tansom
About This Episode
Peter Lehrman is the founder and CEO of Axial, a private platform built to connect buyers, sellers, and M&A advisors in the lower middle market. Before launching Axial in 2009, Peter spent six years helping his brother build GLG, a marketplace for subject matter expertise used by professional investors, and then earned a graduate degree at Stanford while working part-time for a private equity firm. That PE experience was his first front-row seat to how inefficient the small and mid-sized M&A market actually is. He brings a builder’s lens to a market most people only see once in their lives, which makes him a useful counterweight to the typical broker or banker conversation.
Resources Mentioned
- Axial — The private platform connecting buyers, sellers, and M&A advisors in the lower middle market. Free for entrepreneurs. — axial.net
- Middle Market Review — Axial’s weekly publication with valuation calculators, checklists, and transaction guides. — middlemarketreview.com
- GLG — The expert network company Peter helped build with his brother before Axial.
- National Center for the Middle Market — Academic research source out of Ohio State University Peter cited for market sizing data.
- GF Data — Referenced for lower middle market transaction data.
- Private Equity Funcast — Podcast Ryan referenced where the “proprietary deal flow” reality gets discussed candidly.
- Peter’s email — peter@axial.net for direct outreach.
Connections
Phase + Module:
- Module 2 — Expand Knowledge — The education-before-execution discipline Peter and Ryan both push owners toward
- Module 1 — Ownership Goals — Sets the constraints that determine what “the right buyer” even means
Milestones:
- Milestone 5 — Market Value — What buyers will actually pay, which only exists when multiple are at the table
- Milestone 6 — Transaction Value — Where psychology, strategic fit, and deal structure move the number above intrinsic
- Milestone 4 — Owner’s Value (DCF) — The intrinsic floor Peter calls “the economically rational animal’s value”
Concepts referenced:
- Three Lenses of Value — Owner’s value, market value, transaction value as separate questions
- The Multiple & WACC — Why cash flow predictability drives the multiple buyers will pay
- Value Gap — The space between intrinsic value and what the market will actually transact at
- Sustainable Financials — Clean books as the entry ticket to a real buyer conversation