Insights by Candor Advisors

When founders begin talking with investment bankers or private equity buyers, they often hear terminology that has little to do with how they actually operate their business. One of the most important examples is whether a company is viewed as a “platform” investment or an “add-on” acquisition. In this episode, Kirk Michie breaks down what those categories mean, how buyers use them, and why the distinction can materially affect valuation, deal structure, and buyer interest during an M&A process.

The M&A market in early 2026 is not closed, but it is becoming more selective. In this update, Kirk Michie explains what Candor Advisors is seeing across founder-led transactions, private equity activity, buyer behavior, valuation expectations, and market timing. For strong companies in favored sectors, the market may still support strong valuations and favorable terms. For others, buyers may be quicker to pass, which means founders need better data before deciding whether to go to market.

Selling a business is not just a valuation exercise. It is also a tax planning event that can dramatically affect how much money a founder actually keeps after closing. In this episode, Kirk Michie walks through the role CPAs, investment bankers, and estate planning professionals play during founder-led exits. The discussion covers capital gains taxes, rollover equity, transaction timing, state tax exposure, and why founders should avoid making assumptions too early in the process.

Figuring out what your company is worth is one of the first steps in exit planning, but acquiring that number shouldn't break the bank. Many founders mistakenly believe they must hire a professional appraiser right out of the gate, spending tens of thousands of dollars just to see if a sale makes financial sense. In reality, unless you are navigating a specific legal or structural event, there are far more cost-effective ways to gauge your market value. In the video below, Kirk Michie explains why you can likely skip the formal appraisal and how to use transaction advisors to confidently plan your exit.

The Reality: You Don’t Fully Control the Outcome

The first hard truth is this: once you sell your business, you no longer control most personnel decisions unless you are willing to walk away from the deal.

That doesn’t mean you’re powerless. But it does mean that promises, assumptions, or informal assurances can quickly create risk—both legal and operational.

Employee outcomes depend largely on three things:

The type of buyer

The strategic rationale for the acquisition

How communication is handled before and after closing

Each of these deserves careful consideration.

How Buyer Type Shapes Employee Outcomes

Strategic Buyers

When the buyer is a strategic acquirer, outcomes depend on scale and intent.

If your company is being acquired for geography, customer access, or a complementary product or service, there’s often a desire to keep operations largely intact—at least initially. In those cases, most employees continue in their roles, sometimes with minimal immediate change.

However, overlapping functions are commonly consolidated. Finance, HR, administrative roles, and back-office support are the most exposed. Large organizations already have these functions centralized, and maintaining duplicate departments rarely makes sense.

Importantly, these eliminations are usually not the primary motivation for the deal. They’re a byproduct of integration.

Private Equity Buyers

Private equity buyers typically want continuity. They are not operators, and they rely on existing teams to run the business.

In many cases, private equity ownership leads to more structure rather than fewer people. Additional reporting, stronger financial controls, new systems, or leadership hires may be introduced to support growth.

While workloads often increase, broad layoffs are uncommon unless the acquisition is part of a larger consolidation strategy.

In many straightforward transactions—such as the sale of a pass-through entity like an LLC or S-corp—proceeds are typically taxed as capital gains at the federal level. Depending on where you live, state capital gains taxes may also apply.

For founders in high-tax states, state taxes alone can materially reduce proceeds. Combined with federal capital gains, this may result in the highest tax rate you’ve ever paid on a single event.

This is the baseline—but it is not the whole story.

Once you reach the bottom of the funnel, the process becomes less theoretical and far more practical. At this stage, you’re no longer asking whether to sell or how the process works—you’re evaluating real offers from real buyers.

This is where many founders make costly mistakes. Multiple offers can look similar on the surface, yet lead to dramatically different outcomes depending on structure, certainty, and risk. The headline number alone rarely tells the full story.

This episode breaks down how to compare offers methodically, so you can see which deal actually delivers the best outcome—not just the biggest number.

Once you reach the bottom of the funnel, the conversation shifts from whether you’ll sell to how the deal will actually be structured. This is where specific deal terms start to matter—sometimes more than headline price.

One of the most common and most misunderstood of those terms is the earn-out. It often shows up in a Letter of Intent and can look attractive on the surface. In reality, it’s one of the most important areas where founders need to slow down, understand the tradeoffs, and be clear-eyed about risk.

This episode explains what an earn-out really is, why buyers propose them, and how to think about whether agreeing to one makes sense in your situation.

An LOI, or Letter of Intent, is a written document that outlines the basic terms under which a buyer proposes to acquire your business. It typically comes after initial conversations and early indications of interest, but before a definitive purchase agreement.

Importantly, an LOI is not the sale of your business. It is a framework that allows both sides to agree on major points—price, structure, timing—so the buyer can justify entering formal due diligence. While parts of the LOI may be binding, the transaction itself is not finalized at this stage.

Understanding this distinction is critical. Many founders either overestimate the security of an LOI or underestimate the constraints it creates once signed.

Learn More about Candor Advisors at https://candor-advisors.com