Alumni Rollup Engine

The whole deal, one table

Three parties. Base case: 8 companies at $500K EBITDA each, sold in year 3 at 8x.

Exhibit A — who puts in what, who takes out whatYear-3 exit at 8.0x

Party	How many	Puts in	Cash at close	Cash during hold	Equity	Cash at exit	Total out	Return
OperatorsEach seller	8	Their business, valued at 3.0x LTM = $1.5MKeeps running it as regional GM	$750,000Loan paid off first	~$180K/yrSalary + bonus	3.125%25% total	$1,390,000	$2,140,000	1.43xvs $1.85M solo
InvestorsWhole round	8–12	$9.5M cash at a $24.0M platform mark (6.0x)8% pref, liq. preference, 2 board seats	—	$0Reinvested into tuck-ins	39.6%	$17,620,000	$17,620,000	1.86x23.0% IRR
YouSponsor	1	$0 cash — origination, the options, the AI layer, managementVests over 3 years	$0	$900,000Net of 2.5% support fee	35.4%	$15,750,000	$16,650,000	∞No cash in
Platform	—	$22.4M revenue · $4.0M EBITDA at close	$6.0M out	—	100%	$44,500,000	$48.0M EV	8.0x

Exit equity reconciles: $15.75M + $17.62M + $11.13M = $44.5M. Enterprise value $48.0M less $3.5M of tuck-in debt.

What you say to a business owner

The one-sentence pitch Take half your business off the table in cash today, get your name off the bank loan, and roll the other half into a group of eight companies like yours — where the market pays double the multiple you'd ever get selling alone.

Say it in that order. The cash and the personal guarantee are what make them lean in; the multiple is what makes them say yes.

Then the four things they actually care about, in the order they care about them:

$750,000 in cash at closing. Their acquisition loan gets paid off out of it — they see the net number before they sign anything.
The personal guarantee comes off. For most of them this matters more than the money. Their house stops being collateral.
They keep running their business as regional GM, on salary and bonus, with shared dispatch, marketing, procurement and back office handed to them.
Their remaining half re-rates. $750K of contributed value sits inside a platform the market prices at 8–10x instead of 3x. In three years it's worth ~$1.39M.

Do not oversell this

Total to the owner is $2.14M versus roughly $1.85M if they keep grinding alone and sell at 3.2x in three years. That is a 16% premium plus liquidity today plus the guarantee released — a good, honest trade. It is not "get rich." An owner who runs the numbers will see that, and if we've oversold it, we lose them and they tell the other seven.

Fix it structurally instead: add a 10% exit bonus pool for GMs who hit their unit targets. That lifts a strong operator to roughly $2.5M and costs the sponsor ~$1.6M out of $15.75M. Cheap.

The agreement they sign — one page

Binding option to contribute, signed once. Eleven terms. This is the commercial skeleton for counsel to paper, not a legal document.

Exhibit B — binding option & contribution agreementOwner ⇄ Newco

What is grantedNewco has the exclusive, irrevocable right — not the obligation — to acquire 100% of the business at any point in the option term.
Price3.0x LTM EBITDA, measured at the month-end before exercise, as adjusted by an independent Quality of Earnings review. If QoE lands within 10% of the owner's number, the price stands.
How it's paid50% cash at closing. 50% in Newco Class A units, credited at the same 3.0x, at the same per-unit price the incoming investors pay.
Term9 months, with one 3-month extension at Newco's election.
ExclusivityThe owner will not market, list, or negotiate a sale of the business to anyone else during the term.
Conditions to close(a) QoE confirms EBITDA; (b) lender payoff or consent obtained; (c) a minimum of 6 companies close simultaneously; (d) Newco's financing is funded.
If it doesn't closeIf fewer than 6 companies close, the option simply lapses. The owner owes nothing, keeps whatever diligence work has been completed on their business, and walks away free. No penalty, no clawback, no obligation.
Their job24-month employment agreement as regional General Manager. Base salary at market, plus a bonus on their own unit's EBITDA growth, plus participation in the 10% exit bonus pool.
Their unitsVest 1/3 per year over 3 years. Good-leaver keeps vested units; bad-leaver forfeits unvested. Tag-along rights on any sale. Drag-along applies so a full exit can actually close.
What it costs the ownerNothing. Newco pays for independent legal counsel of the owner's own choosing, up to $7,500, and for the full Quality of Earnings review of their business. The owner keeps the completed QoE report whether or not the deal closes — it is theirs, and it is worth $15–25K to any future sale. That spend is the consideration that makes the option binding.
Non-compete3 years post-close, same sector, 50-mile radius. Standard and expected.

The walk-away clause is what closes deals

An owner's real fear is signing something that traps them while we go fishing for money. Clause 7 removes it: if the round doesn't come together, the option lapses and they walk away owing nothing — holding a free Quality of Earnings report on their own business. That converts "let me think about it" into a signature, and it costs us nothing they didn't already need.

One thing for counsel: an option with no cash consideration is binding in most states on mutual covenants alone, but some require a nominal recited sum. Have counsel confirm the wording per state before the first signature — it is a drafting question, not a structural one.

The AI support fee — the cash flow line

The management company signs a Management Services Agreement with each operating company on Day 1. This is your cash flow during the hold, and it is separate from equity.

Exhibit C — management services agreement termsPer operating company

Term	Detail	Per company
Fee	2.5% of gross revenue, billed monthly in arrears	$70,000 / yr
Floor	$4,000 per month per location, so small units still cover cost	$48,000 / yr
Cap	3.0% — cannot be raised without unanimous board consent	$84,000 / yr
Sales & CSR	AI inbound call answering, quoting, booking, follow-up, review generation	included
Marketing	Paid acquisition, local SEO, brand, creative, lead routing	included
Operations	Dispatch, scheduling, routing, capacity planning, pricing	included
Back office	AP/AR, collections, payroll, bookkeeping, monthly close	included
Shared services	Procurement, HR, insurance, compliance, IT	included
Excluded	Capex, legal, one-off M&A costs — billed at cost	—
Platform total	8 companies, year 1, growing to ~$800K by year 3	$560,000 / yr

Over the three-year hold: about $2.0M gross, roughly $900K net after the cost of actually delivering the services. That money arrives from month one and funds origination on the next rollup.

Model it as a cost, never as an add-back

A related-party fee paid to the sponsor is the first thing a buyer's diligence team normalises out. Every exit figure in this plan is already computed after the fee. If you build a model that adds it back, you lose two turns of multiple in the final week of a sale process.

The defensible position: the fee replaces eight sets of owner overhead worth $120–180K each. Keep per-service-line cost accounting from Day 1 so you can prove it.

What you say to investors

The one-sentence pitch — after the options are signed I hold binding options to buy eight profitable companies in one sector — $22 million of revenue and $4 million of EBITDA — at three times earnings; I need $9.5 million to close them all on the same day, and platforms this size trade at eight to ten times.

The word that does the work is binding. Without signed options this is a pitch. With them it's a position, and the conversation changes completely.

How you justify 6x to someone writing the cheque

Four lines, in this order. Nothing else.

"You're coming in at 6x. I'm buying the assets at 3x." On day one they own a claim on companies that cost half what they paid. That is the downside protection, and it's the only thing that matters in the first meeting.
"Here are three comparable transactions." Real deals in the same sector at $4–6M EBITDA, with multiples and dates. Comps, not projections. If you can't produce three, pick a different sector.
"We underwrite the exit at 8x." Not 10x. Underwriting at 8 and delivering 9 is a career. Underwriting at 10 and delivering 8 is a lawsuit.
"If the market only gives us 6x — the same multiple you paid — you still make 1.35x, because EBITDA grows 50%." This line closes sophisticated investors. It proves the deal doesn't depend on multiple expansion.

Never promise 10x

10x is upside you show on the sensitivity page, never the number you underwrite to. Put 8x in the model, 10x in the right-hand column, and 6x in the downside case — and walk them through the downside case first. Investors who hear the bad scenario from you before they find it themselves will fund you.

Returns at every exit multiple

Three-year hold. Year-3 EBITDA of $6.0M, built from 5% organic growth, +250bps of AI-driven margin, and three tuck-ins at 4x. Net debt at exit $3.5M.

Exhibit D — outcomes by exit multipleSale in year 3

Exit	EV	Equity	You (35.4%)	You + fees	Investors (39.6%)	Investor MoM	Investor IRR	Each operator
10.0x Upside	$60.0M	$56.5M	$20.0M	$20.9M	$22.4M	2.36x	33.2%	$1.77M
9.0x	$54.0M	$50.5M	$17.9M	$18.8M	$20.0M	2.10x	28.1%	$1.58M
8.0x Underwrite	$48.0M	$44.5M	$15.8M	$16.7M	$17.6M	1.86x	23.0%	$1.39M
6.0x Downside	$36.0M	$32.5M	$11.5M	$12.4M	$12.9M	1.35x	10.6%	$1.02M
6.0x, no growth Failure	$24.0M	$20.5M	$7.3M	$8.2M	$8.1M	0.85x	–5.2%	$0.64M

Where the 20%+ comes from

Investors clear 20% IRR at any exit multiple of 7.5x or better on a three-year hold. That is the whole reason to compress the hold from four years to three: same 8x exit, same dollars, but 17.8% IRR becomes 23.0% IRR. Time is the cheapest lever in the model.

If a lead investor still pushes for more, give ownership rather than terms: dropping yourself from 35.4% to 30% takes them to 45%, 2.11x and 28.3% IRR — and you still take $14.3M. You have real headroom. Know that before the first meeting.

The only row that fails is the last one, and note what it is: not multiple compression — operational failure. Buying eight businesses and not growing them. The multiple arbitrage protects you; bad operations do not have a hedge. That row is the entire argument for hiring the platform CEO before the raise, not after.

How fast this can actually go

Two straight answers first

An IPO is not available at this size. The smallest credible US listing needs roughly $15–25M of EBITDA and $50M+ of revenue, plus two years of audited financials and a real institutional following. At $6M EBITDA the exit is a PE sale or a strategic buyer. Take the IPO language out of the investor deck — a sophisticated LP hearing "IPO" attached to a $4M-EBITDA platform stops listening.

Selling 12 months after close does not work either. A platform that closed a year ago has eight sets of books that haven't been consolidated, no audited combined financials, and no proof the synergies are real. A buyer prices it as the sum of its parts — 5–6x, not 8–10x. You would be selling them the story you just bought. The re-rate needs 24 months of proof minimum. Thirty-six is where the number lands.

The clock

Months 1–2Screen the 240 and pick the sectorPull sector, close date, entry multiple, loan balance and LTM EBITDA for every client. Confirm three real comps above 7x in the chosen sector. This either confirms the plan or kills it in eight weeks.
Months 2–5Sign 12 binding optionsOne-to-one, never a group announcement. Target 12 signatures for 8 slots. No cash to owners — we fund their independent counsel (~$7,500 each, ~$90K total) and their QoE. Independent counsel from the first meeting.
Months 3–5Hire the platform CEORan a multi-site business of $30M+ in this sector. Joins before the raise and helps pitch it — investors underwrite this person as much as the assets.
Months 4–7QoE, structure, and the raiseThird-party QoE on the top 10. Newco formed, contribution agreements drafted, MSA papered. Raise $9.5M — one lead for $6–7M plus 8–12 individuals.
Months 7–10Consents and definitive documentsLender payoff letters, landlord and franchise consents, licence transfers, insurance. This phase always overruns — protect the option expiry dates.
Month 10–12Day 1 — simultaneous closeEight closings, one day, one funds flow.
Months 12–24Integrate and prove itAI operating layer live across all eight. Consolidated audited financials. Two tuck-ins at 4x. This is the phase that creates the 8x — not the buying.
Months 24–30Optional: recapitaliseSee below. Takes cash off the table without ending the compounding.
Months 36–42Sale processBanker engaged at month 33. Close at month 42–48. Total time from first client call to money in your account: roughly 4 years.

The fast-cash path — recapitalise at month 24

If waiting four years for a single payday is the problem, don't shorten the hold — take a first bite mid-way. At month 24 the platform is at roughly $5.2M EBITDA with two years of clean consolidated numbers. Sell 50% of the equity to a PE firm at 7.5x:

EV $39.0M, equity $36.0M, half of it sold for $18.0M
Your share of that: $6.4M in cash at month 24
You keep 35.4% of the remaining half and ride the second bite to month 54, typically at a higher multiple with a real PE partner behind it
Investors get most of their capital back early, which pulls their IRR up sharply even if the final multiple disappoints

This is how the outcome gets to $20M+ without betting everything on one exit window. It is the single best structural improvement available to this plan.

What kills this

Exhibit E — risk registerRanked by likelihood of stopping the deal

#	Risk	Control
1	Lender change-of-controlNearly every client bought with an SBA 7(a) loan. Those accelerate on transfer — the full balance repays at close, out of the cash half.	Pull every loan balance during the screen. Any owner whose balance exceeds 45% of the 3x offer is out. Confirm the 5/3/1% prepayment window has closed.
2	Conflict of interestWe advised them into the purchase and now sit on the other side of the sale. One bad rollup is a lawsuit and the end of the education business.	Independent seller counsel we pay for, third-party fairness opinion on both the 3x and the 6x mark, written disclosure of sponsor economics, zero program pressure.
3	Operational failureThe only row in Exhibit D that loses money.	Platform CEO hired before the raise. Budget $350–450K plus equity. Highest-leverage cheque in the plan.
4	Securities lawThe $9.5M raise and the units issued to eight sellers are both securities offerings.	Reg D 506(b) or (c) with real securities counsel. Budget $150–250K. Not a template.
5	Simultaneous-close failureOne seller walking on closing day breaks the model the round was priced on.	Twelve options for eight slots. Price the raise off a floor of six companies so attrition doesn't reprice the round.
6	Operator flightSellers roll, take the cash, then disengage.	Units vest over 3 years, good/bad-leaver terms, exit bonus pool tied to their own unit.

Tailwind worth naming to investors

The SBA rule change expected around October 2026 caps seller and investor notes at roughly 5% of a deal. That makes life materially harder for the individual SBA buyer — exactly who we compete with for tuck-ins. An equity-funded platform that closes in 30 days without a lender becomes the preferred buyer in the sector. Our tuck-in multiples should fall over the hold, not rise.

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Decisions needed to start

Approve the screen. Eight weeks of data work across the 240 clients. Everything depends on the sector table it produces — and it may show fewer than eight qualified owners in every sector, which is worth knowing now.
Approve funding the owners' counsel and QoE. Roughly $90K of legal across twelve options, plus QoE on the ones we exercise. Owners pay nothing and receive nothing in cash — that spend is what makes the options binding, and binding options are what change the investor conversation.
Authorise the legal spend. $150–250K for our own securities and M&A counsel, before the first option is signed.
Confirm the 3-year hold with a month-24 recap option, and drop IPO language from all materials.
Name the first sector — or let the screen name it.