Australian business owners selling at $2M to $25M EBITDA have three realistic exit routes: a trade sale to a strategic acquirer, a private equity deal where the owner usually rolls part of their equity and sells again later, or a management buyout to the existing team. Trade sales are the most common by a wide margin. The right route depends less on price than on what you want your involvement to look like afterwards.
The three routes, and how common each actually is
There are three kinds of buyer for a mid-market Australian business. They want different things, and they will structure the same business in very different ways.
The proportions are lopsided. Grant Thornton’s Dealtracker, covering 1,195 Australian transactions, found corporate and trade buyers accounted for around 90% of deals and investment managers including private equity around 10%. Management buyouts are a subset smaller again, and there is no reliable Australian data on how frequently they occur. So a trade sale is the base case, private equity is a real but narrower option, and an MBO is usually driven by circumstance rather than chosen from a menu.
That said, private equity is genuinely active in this range. The Australian Investment Council recorded $13.6 billion across 147 private equity deals in 2025, with an average deal size around $93 million, and several mid-market funds are currently raising. Firms in this segment typically look for $5 million or more in EBITDA, so the lower end of the $2M to $25M range is thin for institutional buyers while the upper half is well covered.
The comparison
| Trade sale | Private equity | Management buyout | |
|---|---|---|---|
| Who is buying | A competitor, customer, supplier or adjacent operator, often part of a larger group | A fund buying a controlling or significant stake, to sell again in several years | Your existing management team, usually backed by debt or a financial partner |
| What they are buying | Strategic fit: your customers, capability, territory or capacity | A platform to grow, or a bolt-on to something they already own | A business they already understand and can run |
| Cash at completion | Usually the highest proportion | Partial. You are typically asked to roll equity and take the balance later | Often the lowest. Frequently involves vendor finance or staged payments |
| Your role afterwards | A handover, commonly 3–12 months, then out | Continuing, often 3–5 years, with a second sale at the end | Usually a clean break, sometimes with a vendor finance tail |
| What happens to the business | Frequently absorbed. Brand, systems and some roles may not survive | Kept intact and grown, then sold on | Continues largely unchanged |
| Typical timeline | 6–9 months | 8–12 months | 3–9 months |
| Main risk to you | Confidentiality: your buyer is often your competitor | The second bite depends on performance you no longer fully control | The team cannot raise the money, or the price is below market |
Trade sale
A trade sale means selling to an operating business, most often one in your sector or one immediately adjacent to it. It is the most common outcome for Australian mid-market businesses and, for an owner who wants to leave, generally the most straightforward.
The reason strategic buyers can pay well is that they are not only buying your earnings. They are buying what your business does for theirs: access to your customers, a capability they would otherwise have to build, entry to a state or a market segment, or the removal of a competitor. Where that strategic logic is strong, the price can exceed anything a purely financial buyer would justify, because the buyer is valuing the combined business rather than yours in isolation.
The costs are confidentiality and control. The buyers most likely to pay a premium are the parties you would least like to show your customer list to, which is why a trade process needs to be run in stages rather than as an open conversation. Then there is what happens afterwards. A strategic acquirer is usually buying to absorb, and the business you built may not exist in recognisable form in three years. If that matters to you, say so early, because it changes which buyers should be approached.
Private equity
Owners often assume private equity means selling the whole business. It usually does not.
The typical structure has the fund acquiring a controlling stake while the owner retains a meaningful minority, reinvested into the acquiring vehicle rather than cashed out. You take a substantial amount off the table now, keep a stake in a business that is being actively grown, and sell that stake alongside the fund in three to five years. That second sale is what advisers mean by the "second bite of the cherry", and where the growth plan works it can be worth more than the first.
Owners consistently underestimate three parts of this.
- You are taking on a partner, not leaving. A fund will want board representation, formal reporting, agreed budgets, and a say in decisions you have made alone for twenty years. For some owners this is welcome structure. For others it is the single worst part of the deal, and it is entirely foreseeable.
- The second bite is not guaranteed money. Its value depends on how the business performs under a strategy you now only partly control, and on market conditions at a future exit. It is genuine upside, and it is risk. Owners who need certainty should weight cash at completion more heavily and accept a lower headline number.
- Rolling equity is not automatically tax-free. Australia has scrip-for-scrip rollover relief that can defer the capital gain where shares are exchanged for shares, but it carries real conditions. The acquirer generally needs to end up with at least 80% of voting shares, all voting shareholders must be able to participate on substantially the same terms, and rollover applies only to the scrip portion, so the cash you take at completion remains taxable. The "substantially the same terms" requirement is exactly where PE structures come under pressure, because a fund typically requires founders and management to roll while passive shareholders are cashed out. Treat rollover relief as something to be engineered with your tax adviser during structuring, not something to be assumed.
One further gap worth naming. The capital gains tax changes taking effect from 1 July 2027 have not yet been reconciled with rollover equity or earnouts. The government has said carve-outs are intended following consultation, but no legislative detail has been published. If your deal involves a second bite realised after that date, the treatment is currently unresolved and should be reviewed with your adviser rather than assumed.
Management buyout
An MBO means selling to the people already running the business. It is the least visible of the three routes and, in the right circumstances, the best one.
What makes it work is that the buyer already knows what they are buying. Due diligence is faster and less adversarial, there is no confidentiality exposure to competitors, staff and customers experience continuity rather than upheaval, and the business you built continues. For an owner whose priority is legacy and people rather than the last dollar, this is a materially better outcome than a trade sale, and it is sometimes the right answer even where it pays less.
The constraint is always funding. Management teams rarely have the capital, so the price has to be assembled from some combination of bank debt, private credit, a financial partner and vendor finance, which means you carry part of the price as a debt owed to you and remain exposed to the business after you have left. That exposure is the real trade-off in an MBO, and it should be priced and secured properly rather than treated as a formality. See how vendor finance is secured.
The funding environment has improved substantially. Australia’s private credit market reached around $234.5 billion in 2025, having grown at roughly 21% a year over the past decade against about 5.5% for commercial bank lending, and mid-market borrowers now have financing options that did not exist a decade ago. That has made MBOs more fundable than they were, without making them easy.
An MBO negotiated privately with your own team, without a market test, is the structure most likely to leave value on the table. You are negotiating with people you like, who know your business intimately, and who have every incentive to argue it is worth less. Even where you fully intend to sell to management, knowing what the open market would pay changes the conversation.
Does one route actually pay more?
The conventional answer is that strategic buyers pay a premium because they can extract synergies. The Australian data does not straightforwardly support it.
Grant Thornton’s Dealtracker reports a median EV/EBITDA multiple of 9.8x for deals acquired by investment managers including private equity, against 8.1x for corporate and trade acquirers, with an overall median of 8.3x. That is not evidence that private equity outbids trade buyers for the same business. It more likely reflects what each buyer type acquires: funds are selective, and tend to buy larger, cleaner, faster-growing businesses, which attract higher multiples regardless of who buys them.
Multiples are driven more by the quality of the business and the competitiveness of the process, covered in How Much Is My Business Worth?, than by the category of buyer. The highest offer in any given process is not reliably predictable by buyer type in advance, which is the argument for approaching more than one kind rather than settling on a route first.
How to choose
Price is the wrong first question, because all three routes can produce a good price and none reliably produces the best one. Start here.
- Do you want to be finished at completion, or are you willing to work for another three to five years? If you want out, a trade sale or an MBO fits. Private equity generally does not.
- How much certainty do you need? Cash at completion is certain. Rollover equity, earnouts and vendor finance are not (see earnouts and vendor finance, explained). Weight accordingly and be honest about your own tolerance.
- Does it matter to you what happens to the business and the people in it? If yes, all three can provide this, but early work with the buyer to identify if they have a stated intention to keep the business operating.
- Is your business at a size and quality that institutional buyers will look at? Below around $5 million of EBITDA the private equity universe thins considerably.
- Does a credible management team already exist? An MBO is only available if the answer is yes, and that is a matter of fact rather than optimism.
In practice the route is often decided by which buyers respond rather than by which you preferred at the outset, which is a further reason to approach a genuine field rather than pre-selecting one type.
Where M&A Concierge fits
Advisors are not equally strong across all three routes. A firm with deep trade relationships in your sector may have little private equity coverage. A firm that runs institutional processes well may be the wrong choice for a straightforward MBO where the work is structuring and financing rather than buyer access. Choosing the advisor before understanding the likely route, or the route before understanding which advisors can actually run it, is a common and expensive sequencing error.
M&A Concierge works on M&A advisor selection: matching business owners with the right advisor for their business and their likely buyer universe, drawn from a proprietary M&A advisor database spanning 100+ industry sectors across the Australian mid-market. Our fee is a uniform referral rate model, paid by the advisor rather than by you, and the rate does not change according to which advisor is recommended.
A trade sale is to an operating business, usually in your sector, that is buying for strategic reasons and typically pays most or all of the price at completion. Private equity is a fund buying to grow the business and sell it again in three to five years, which usually means you retain a stake, stay involved, and realise part of your value at that second sale rather than now. Trade sales suit owners who want to leave. Private equity suits owners willing to keep working with a partner.
Possibly, if it is large enough and growing. Australian mid-market funds generally look for at least $5 million in EBITDA, so businesses below that are unlikely to attract institutional interest directly, though they may be acquired as bolt-ons to a platform a fund already owns. Private equity accounted for around 10% of Australian transactions in Grant Thornton’s Dealtracker sample, with trade and corporate buyers making up roughly 90%.
Rollover means reinvesting part of your proceeds into the buyer’s acquisition vehicle instead of taking it all in cash, so you keep a stake in the business going forward and sell it alongside the fund at the next exit. There is no reliable Australian data on typical rollover percentages, and figures quoted online are generally drawn from United States sources, so treat any specific number with caution. What matters more than the percentage is whether the rolled stake carries the same rights as the fund’s, and how the eventual exit is governed.
Scrip-for-scrip rollover relief can defer the capital gain where shares are exchanged for shares, but it is conditional rather than automatic. The acquiring entity generally needs to end up holding at least 80% of voting shares, all voting shareholders must be able to participate on substantially the same terms, and any cash you receive remains taxable. Private equity structures that require founders to roll while other shareholders cash out can put the "substantially the same terms" condition under pressure. This needs to be structured with a tax adviser rather than assumed.
Usually through a combination of bank debt, private credit, management’s own contribution and vendor finance, where you leave part of the price outstanding and are repaid over time. The mix depends on the business’s cash flows and asset base. Australian private credit has grown substantially, reaching around $234.5 billion in 2025, which has widened the options available to mid-market buyout teams. There is no reliable Australian data on how much of a price management typically funds themselves, so be sceptical of specific figures.
The Australian data is counter-intuitive. Grant Thornton’s Dealtracker recorded a median EV/EBITDA of 9.8x for private equity acquirers against 8.1x for corporate and trade acquirers. That most likely reflects the kind of businesses funds choose to buy rather than a willingness to outbid trade buyers for the same asset. In practice the multiple is driven far more by the quality of the business and the competitiveness of the process than by the category of buyer.
A management buyout can be fastest where financing is already arranged, sometimes three to six months, because the buyer needs little due diligence. Trade sales typically run six to nine months. Private equity processes usually run longest, around eight to twelve months, because commercial due diligence is deeper and investment committee approval adds a decision gate. Speed should not decide the route, but a private equity process is also a longer one.
Yes, and that is effectively what a private equity transaction is. You sell a controlling stake, retain a minority, and realise the balance at a later exit. Some funds also take genuine minority positions where the owner wants liquidity without giving up control, though these are less common and usually come with stronger protections for the investor. A partial sale is worth considering if you want to take risk off the table without stopping work.