36: Outgrown the Broker, Ignored by the Banker? How to Sell in the Lower Middle Market
Karl Sigerist, Managing Director at the Shaughnessy Group
In this episode of From Angel to Exit, host Bruce Eckfeldt sits down with Karl Sigerist, Managing Director at the Shaughnessy Group, to dive deep into the complexities of exiting a business in the lower middle market. Karl brings a wealth of experience from his own entrepreneurial journey—scaling and selling multiple businesses—and from helping other founders do the same.
Karl defines the “exit gap” facing many entrepreneurs: businesses that are too complex for brokers but too small to interest traditional investment banks. He unpacks why most M&A deals in this range fail—highlighting issues such as overvaluation, lack of preparation, and missing succession plans. Using real-world analogies and investor logic, Karl emphasizes the need for early preparation, clean financials, strategic buyer outreach, and founder mindset shifts.
The conversation covers everything from valuation models and EBITDA multiples to micro private equity trends and the importance of cultural alignment during long deal timelines. Founders will walk away with a clearer understanding of what drives business value and how to optimize for a strategic or financial sale—even years before the exit window opens.
Key Takeaways
80% of lower middle market exits fail due to poor preparation and unrealistic valuations.
Clean, audited financials are essential for attracting serious buyers.
Valuation is driven by future cash flow, quality of earnings, and industry comparables.
Strategic buyers and micro PE funds require different approaches—know your audience.
Scaling past $1M–$3M in EBITDA significantly boosts your exit multiple.
Succession planning is non-negotiable; your business must be transferable.
Founders should think like buyers—objectivity creates better deal outcomes.
Exit planning should begin 5–10 years in advance, not 6 months before a sale.
Contact Information:
https://www.linkedin.com/in/karlsigeristjr/
