Ep. 447 — Jeff Buettner: Q2 2025 M&A Update — Tariffs, Tweeners, and the $5M Inflection Point

6 min read

Subscribe: Apple Podcasts · Spotify · YouTube · Amazon Music · iHeartRadio · Pandora · RSS

Episode Summary

You built a business doing $2M of normalized EBITDA. You’re not Main Street. You’re not lower middle market either. You’re stuck in the no man’s land where nobody quite knows what to do with you, and every advisor you talk to is sized for somebody bigger or somebody smaller. Meanwhile the tariffs landed, half your buyer pool went pencils down, and your CPA can’t tell you what your business is actually worth in this market. Jeff Buettner and I sat down for our Q2 2025 update and got into what’s actually happening behind closed doors right now: why financial buyers froze, why strategic buyers are still moving, what lenders are doing on terms, and the size threshold where your options open up. We got specific on the tweener problem (the 10–40M revenue, 2–3M EBITDA business with a working owner-operator who isn’t a job and isn’t institutional). Jeff laid out the rule of thumb I’ve been waiting for: one audit cycle of your leadership team running the business without you shrinks the earn-out. Two cycles and growing? Even better. We closed on the inflation question nobody is asking yet: when money printing shows up in valuations, the only owners who hold value are the ones who can pass cost through.

Top 10 Takeaways

  1. When you can’t price the tariff, you can’t price the deal. Both sides go pencils down until clarity returns.
  2. Strategic buyers are still moving because they understand their own supply chain risk and can underwrite yours.
  3. Financial buyers are on the sidelines for anything with international exposure. They cannot underwrite what they cannot model.
  4. The $5M normalized EBITDA mark is not a bright line, it’s a bell curve where your options materially expand.
  5. Diligence takes the same time whether you’re $500K or $5M of EBITDA. Buyers spend their hours where the payoff is bigger.
  6. Cash-basis QuickBooks financials cost you optionality before they cost you valuation. Buyers walk before they bid.
  7. One audit cycle of your leadership team running the company without you shrinks your earn-out. Two cycles shrinks it more.
  8. If you can pass inflation through to your customers, you preserve your multiple. If you can’t, your margins rot and so does your value.
  9. Build the Three-Statement Model so lenders can underwrite future cash flow, not just the receivables sitting on your balance sheet.
  10. The worst position is sitting in 2028 wanting to sell and having done nothing. Foresight three years out is the real asset.

Sound Bites

“100% of the companies on the planet that I’ve ever met are underpriced… I think a lot of strategic buyers, they might be interested in making an acquisition for competitive reasons. They want to pick up a competitor. They kind of maybe have a little bit more of an understanding and appetite on both sides of the equation.” (@TBD) — Jeff Buettner

“You think about it from the perspective of outside individuals. They’re looking for something that’s worth their time. If you’re at that level, it starts to become interesting because it’s worth someone’s time to dig into this. Where do I want to spend my limited resources of time?” (@TBD) — Jeff Buettner

“I’ve said that I want to eradicate the words exit planning because people say those words, they do nothing, life happens, they get effed. I want to call it the owner’s playbook because you’re just building a playbook to run the company like private equity and family office while you own it.” (@TBD) — Ryan Tansom

“If you can show two audit cycles, okay, even better. This management team took one audit cycle. Not only did they repeat it, but they grew the business.” (@TBD) — Jeff Buettner

“Just keeping up with the inflation, just kind of preserves your value. It preserves the multiple.” (@TBD) — Jeff Buettner

About This Episode

Jeff Buettner is a Director at ButcherJoseph & Co., the investment bank Ryan brings on quarterly for an honest, behind-the-curtain look at what’s actually happening in middle-market M&A. Jeff works on ESOP transactions, third-party sales, capital raises, and the in-between structures most owners don’t know exist. These Q2/Q3/Q4 updates are designed to give iBD owners the same context a serial capital allocator gets in their boardroom: where lenders are, where buyers are, what’s freezing deals, and what’s still moving.

Resources Mentioned

  • ButcherJoseph & Co. — Jeff’s firm; investment banking and ESOP advisory for middle-market businesses. — butcherjoseph.com
  • GF Data — Middle-market M&A transaction data referenced for quarterly multiples and deal terms.
  • Prior Q1 2025 Update with Jeff — Referenced earlier conversation on buyer types (strategic, financial, ESOP).

Connections

Phase + Module:

Milestones:

Concepts referenced:

Related episodes:

Graph View