What Private Equity Buyers Really Look At When Acquiring Your Business

If you’re a business, healthcare, or veterinary practice owner thinking about selling in the next 1–3 years, this is the episode you cannot skip.

In this conversation, Evergreen M&A Senior Advisor, Hannah Huke sits down with Evergreen Managing Director, Dr. Azza Kennedy and Evergreen M&A Partner Robert Radlich — a private equity veteran who has executed 40+ healthcare acquisitions and led a $275M exit — to break down what private equity–backed buyers actually evaluate when determining your business’ value.

Together, they unpack the metrics, red flags, financials, and operational fundamentals that matter most during a sale - simply and straightforward.

In this episode, you’ll learn:
✔️ What EBITDA really means and why buyers obsess over it
✔️ How founders can clean up their books to increase valuation
✔️ The most common mistakes owners make before going to market
✔️ How staffing, retention, and leadership depth influence offers
✔️ Why messy financials can decrease your valuation 
✔️ What buyers scrutinize most during diligence 
✔️ The difference between growth and profitable growth
✔️ How to think like an investor, even if you’re still operating your business day-to-day

This episode is ideal for:
 • Veterinary practice owners
 • Healthcare founders
 • Multi-site operators
 • Anyone considering a private equity sale
 • Founders who want to understand valuation, EBITDA, and buyer expectations

If you want to sell for maximum value, or simply want to run a more efficient, investor-ready business, this episode gives you the roadmap.

🎧 Listen now and learn how to prepare your business the way buyers actually want to see it.

Real founders. Real exits. Real lessons from the journey. Brought to you by Evergreen M&A: Advisory for Founders.

Transcript

Hannah Huke  0:02  
Hello and welcome to The Founders Journey To Exit, a podcast brought to you by Evergreen M&A Advisory For Founders. We are joined today by Dr. Azza Kennedy, our Managing Director and former veterinary practice owner, and also Evergreens partner Robert Radlich! Hey guys!

Robert Radlich  0:25  
Hey, how's it going?

Hannah Huke  0:26  
 Hey! Thanks for being here today! 

Dr. Azza Diasti Kennedy  0:27  
Thanks for having me today! 

Hannah Huke  0:29  
Yeah, you're welcome! So, you know, first, I just want to give a quick intro to Robert. So Robert has more than a decade in private equity and investment banking. He's worked at private equity firm, Lorient Capital, and he's executed several healthcare transactions. He was the chief growth officer at a northeast veterinary platform, Vet's best friend. While there, Robert completed 43 acquisitions in three years, with 32 in one 12 month period. He didn't sleep at all during that whole time, and was later involved in their strategic sale for 275 million. So Robert has been on all sides of the negotiating table. He's bought, sold, scaled companies, and today he's the partner at Evergreen M&A, where he oversees activity in our service based and healthcare verticals. So thanks for being here Robert!

Robert Radlich  1:35  
Yeah, thank you!

Hannah Huke  1:37  
So, you know, you've been on all sides of the negotiations table. You've been involved in several transactions and mergers and acquisitions over the years. I'd really like to hear why you decided to start Evergreen M&A and you know what makes us really different than other advisory firms or investment banks?

Robert Radlich  2:02  
Yeah, absolutely. So I've been doing deals for a long time, very, in various sizes. So 500k deals, up to, you know, a couple 100 million dollars. And deal with a lot of different investment bankers, business brokers, and kind of advisors to entrepreneur, kind of founder led businesses. And what we found by going through a lot of these deal processes, I'd say specifically, when I was the chief growth officer at the veterinary platform, you mentioned, the level of service that founders were given in the lower middle market. I'll kind of consider that again, that 500k as you know, sub $10 million deal, maybe up to 20 million, you know, really weren't getting great services from the advisory firms, you know, that they were working with to help sell their business. Private Equity is now, in most businesses, you know, on Main Street, whether that's veterinary hospitals, your local HVAC contractor, roofing businesses, it's becoming increasingly sophisticated from a process standpoint. These firms are very smart from an acquisition standpoint, and want to buy, you know, companies right. And what we saw was just bad service, you know, from a lot of the providers who weren't caught up to the times level sophistication that the buyers brought to the table. And ultimately, you know, what we like to say is like, time kills all deals, so the longer deal drags on if, you know, we can't get the information that we need to get the deal done, you know, it eventually stalls out, and that can lead to a failed transaction. So we really started Evergreen with, you know, a client first approach, and kind of taking, hey, we've set on both the selling and buyer, you know, buyer side of the table, right? We know exactly what the PE guys and kind of these strategics want from an acquisition and the information they need to make a really educated decision. And this will kind of go later into our discussion around EBITDA, and kind of profitability, but being able to show each buyer, you know, hey, this is, this is our financial model. These are the materials and all the information you guys need to make an educated bid. And the other piece of that too is like, the numbers got to be right. The numbers need to be really tight when you go through a process. Because the worst thing you can do is, hey, you think you're you're worth this much, buyer starts digging into the details, you know, finds out you're not as profitable as you thought you were, and now you're getting a retrade down the road. So, you know, we bring a very, I would say, custom process to each of the businesses that we take to market that I think differentiates ourselves from the competition, you know, in the market for, you know, M&A advisory in the lower middle market.

Hannah Huke  4:31  
Thank you for that. Yeah, time kills all deals. So it's very important to run a very tight process. And as I always say, you have to hold everybody accountable, not only the founders, but the buyers as well. So today's topic is going to be, what do private equity backed buyers actually look at? So we're going to start with EBITA, everybody's favorite number. Are and Azza, do you want to talk a little bit about EBITDA and your practice? And, you know, did you know about EBITA? Because a lot of people, a lot of founders, don't, and that's okay.

Dr. Azza Diasti Kennedy  5:15  
Yes, I will admit, when I sold my first hospital, I had no idea what EBITDA was. I was running as a, you know, you know, running a great business, an operation, but when buyers started talking about it, I thought, oh, was this a blood test or something. It was pretty foreign to me, so.

Hannah Huke  5:35  
Yeah.

Dr. Azza Diasti Kennedy  5:36  
So basically, what I learned after that is EBITDA is like earning before interest, taxes, depreciation, amortization, basically shows the real, reputable profit after you remove personal or one time cost. It tells buyers how the business performs on its own without your personal spending or accounting choice, choices mixed in. So that's EBITDA!

Hannah Huke  6:04  
Yeah, no. Thank you for that. And Robert, why does EBITDA matter so much to buyers?

Robert Radlich  6:12  
Yeah, it's basically, you know, as Azza said, it's a proxy for cash flow, right? So it's earnings before interest, taxes, depreciation, amortization. So depreciating, depreciation, amortization, are kind of non cash adjustments. So more you're looking at, like net income, and, you know, your taxable income there, and then interest and taxes, again, aren't operationally related to the business, more related to, you know, potential capital structure and tax structure. So it really gives them an idea of how much cash flow this business is going to produce for them after closing the deal. So and EBITDA is important for a lot of reasons, and maybe we can talk through adjustments as well, adding back, kind of, one time expenses. Say, hey, I own a business. I have a car running through this business, that kind of goes away post close. Other things too is, a business owner may not pay themselves a salary through the business. So someone might say, hey, my EBITDA is a million bucks, but you don't pay yourself. So a buyer is going to look at that and say, well, post close. We're the owner now, and now you have to take a salary. So that's going to bring your EBITDA down. So understanding, you know what fair market compensation for you is on the go for is important, because you want to go in with the expectations like, hey, this isn't a million of EBITDA, it's maybe 800,000 and that can swing the valuation, you know, pretty significantly depending on the multiple that the buyer puts on the business.

Hannah Huke  7:29  
Right. And, so how can founders, what can they really do to get their, their books and their financials ready for sale, and, you know, make sure they have a good expectation of, of EBITDA and eventually their, their business valuation.

Robert Radlich  7:49  
Yeah, I would say one, at minimum, be on QuickBooks and have good a accountant, who's going to reconcile your books on a monthly basis. And that's important for a couple things. You want to be able to measure trends in the business, both top line revenue and profitability. I mean, there's still a handful of times we've came across clients who don't even use QuickBooks. They have an accountant, kind of manually putting together PDF financial statements. You know, six months behind...

Hannah Huke  8:16  
Yeah

Robert Radlich  8:16  
...and it makes it really tough for a buyer, who's going to spend a lot of money to acquire your business, to one, analyze it, and two, give you an offer that they're that they're comfortable with. So making sure those are in order prior to sale, I would say, is one of the most critical, critical things you do, you know, besides continue to, to run and grow your business on a day to day basis.

Dr. Azza Diasti Kennedy  8:37  
Now, I'm going to add something to about, going back to the EBITDA thing, to be prepared. I learned that firsthand, as a founder and a business owner, once you understand EBITDA, you realize, like every decision, from staffing to rent, like, you know, Robert says, fed that number. So it's, it taught me to think like an investor and a buyer, not just a business owner or a veterinarian or a dentist, so.

Hannah Huke  9:01  
Yeah, thank you. So Robert, what are? What are some of the biggest mistakes you see founders make when it comes to, you know, their financials, or just getting ready for a sale, or knowing that, you know, they're getting ready for a sale, besides having their financials in PDF format.

Robert Radlich  9:25  
The biggest piece is keeping your foot on the gas. So this is we tell this to everyone, whether we're buying a company, you know, or advising on the sale processes.

Hannah Huke  9:32  
Yeah.

Robert Radlich  9:33  
You have to keep running the business day to day, and there can't be blips in the business, because we're going to take a view of your EBITDA, basically a snapshot in time what's your trailing 12 months? Well, by time we close the deal, could be three to six months past that. The buyers are going to continue to look at the business trend. So if it falls off a cliff, you know, post going to market, you're likely going to get retraded. We've seen this, you know, multiple times in different deal processes, and that's the worst thing. It's like, hey, you're expecting 10 million bucks, now you're getting eight. No one, kind of, feels good about it. So it's just operate your business, you know, as you would have ever done before. Keep your foot in the gas, continue to grow. Let us handle the transaction process, and once it starts getting busier, you know, obviously you'll be more involved in the process in terms of due diligence, I'd say especially post LOI. But just making sure, you know, you continue to grow is probably the most absolutely, you know, critical piece of the process.

Hannah Huke  10:29  
Okay, and then besides EBITDA, and besides keeping your foot on the gas pedal, which I agree, is super important, what else are buyers going to look at?

Robert Radlich  10:42  
Historical growth. Most people want businesses you know, that are growing year over year, and, you know, aren't kind of flat. I think the other big consideration too is, you know, what does your team look like? What does your infrastructure look like? You know, do you have a full, you know, team to operate this, you know, going forward, so they don't have to step in and add additional costs, because that's a lot, buyers will make an adjustment and say, hey, you know, you're running super lean here. Maybe your margin is 30% in an industry that's usually 20% because you outsource billing and coding or something like that. Well, eventually they're gonna have to insource, you know, that kind of position, so making sure you have a great team in place, and then it's kind of technology infrastructure which, is different across various different industries, but making sure you're kind of using those industry leading tech products is also important too.

Hannah Huke  11:33  
Taking it back over to you, Azza, what did buyers scrutinize the most when you were selling?

Dr. Azza Diasti Kennedy  11:40  
I think that, like Robert mentioned, that already is staff engagement, associate retention is very critical. They wanted to know if my my team would stay after I left. And also lease terms actually is a pretty good thing as well. Recurring revenue. They wanted long term stability. So that's what a...

Hannah Huke  12:06  
Great! Yeah, thank you. So Azza, I'll let you answer this first. Any advice for founders, business owners, healthcare practice owners, for, you know, getting ready for a sale and really preparing based on everything we've talked about today. You know, what they what they look at and what's important to them?

Dr. Azza Diasti Kennedy  12:33  
Yeah, I mean preparednesss, like, it's like three aspects, financially, emotionally, and strategically. So if you want to get ready financially, ask yourself, what, what do I actually need from this sale? Do I have a clear number for retirement or upcoming life goals I need to plan for? There is the emotional aspect of it. Are you still energized, or you're like running out of gas and starting to feel like burned out? If you're dreaming about more support, that's probably a sign that you were burned out. And then strategically, like, can your business operate without you? If you have built a system and a team that make it transferable, you are in really good position.

Hannah Huke  13:25  
Great! And Robert, what about you? Any final advice or...

Robert Radlich  13:32  
Words of wisdom?

Hannah Huke  13:33  
... words of wisdom, yes!

Robert Radlich  13:35  
This could be its own podcast, probably. But I'll say, you know, one assembling a great team of advisors around you, whether that's us or someone else on the, kind of, M&A Advisory side. But also think about, kind of, tax accounting, and I would say, even more importantly, a legal advisor specifically, once you start getting towards like, a purchase agreement, and there's a lot of legal documentation that needs to be done and needs to be done correctly, and we'll see a lot of people like, oh, I hired my, you know, personal attorney to do an M&A deal. And I'll say that's probably not the right person to pick there. You want to use, kind of, professional firms, you know, across all gamuts of the deal process, whether that's the M&A advisor, accounting firm, Wealth Management, you know, post close to kind of help manage your finances, or on the legal side, just to make sure you're getting, you know, really good advice from from all parties.

Hannah Huke  14:26  
Great! Azza, Robert, thank you so much for all of those insights. And to our listeners, if you own a business or healthcare practice and you're wondering what you need to do to get ready, to prepare for an exit or sale, or you want to have a conversation about where you're at in the process, we are always happy to help! You can visit our website, evergreenforfounders.com and get in touch with us anytime. We're always happy to have a conversation and help you with your business. Thank you!