Big Story
Q&A: Matthew Cooper on What Sellers Get Wrong Before They Sign Deals
Matthew Cooper is a Partner in the Business and Corporate Law group at MacElree Harvey. He closed several transactions in 2025 across a range of industries and works with clients from startup through exit, serving as primary outside counsel for many of them on an ongoing basis. His clients include third-generation family businesses, middle market corporations, and owner-operators in industries ranging from agriculture and food and beverage to financial services and landscaping.
That background gives him a vantage point most transaction attorneys in the lower middle market do not have. He has seen how institutional buyers think, what they look for in a target, and how they structure deals to protect their own position.
His clearest observation from the deals he worked on in 2025 is about timing. The sellers who reached the best outcomes were not the ones who waited to see what the market would offer them. They were the ones who assembled their team of accountants, investment bankers, and legal counsel early and worked with them proactively. Sellers who were reacting to an unsolicited letter of intent that had already landed on their desk were starting from a weaker position. By the time an LOI arrives, a meaningful amount of the leverage has already shifted to the buyer. The deal structure is framed, the price anchor is set, and the seller is responding rather than leading. Cooper saw this pattern repeat across multiple transactions in 2025 and calls it the single most consistent theme from the year.
His second lesson is about what the purchase price actually means in practice. Private equity buyers are skilled at presenting a large headline number while structuring the deal so that only a portion of it arrives at closing. Earnouts, promissory notes, and indemnity holdbacks are standard mechanisms for deferring payment. Rollover equity is another form of non-cash consideration that shows up regularly. Cooper tells every seller client the same thing at the start of every deal: the only cash you can count on is the cash that is wired to your bank account on closing day. Everything else is a promise with conditions attached, and those conditions have a way of becoming contested after the fact.
Cooper also identified two issues that caught sellers off guard in 2025 and will show up more frequently in 2026. The first is AI disclosure. If a business began using AI tools in its operations at any point, buyers are now requiring disclosure during due diligence and in the representations and warranties section of the purchase agreement. Large language models are not closed systems. Information and data entered into them may not remain confidential, and buyers are sensitive to the possibility that proprietary business information, customer data, or trade secrets were exposed through AI use.
The second issue is landlord and lender relationships. Cooper has seen transactions that were fully negotiated and ready to close get held up by a landlord who was slow to consent to a lease assignment or a lender who was slow to release a lien on business assets. Both of those consents are required before closing can happen, and neither is fully within the control of the seller or the buyer. Deals that stall at the finish line because of a non-responsive third party are one of the most frustrating outcomes in a transaction, and they are largely preventable. Sellers who maintain healthy relationships with their landlords and lenders, and who start those conversations early in the process, eliminate a variable that has derailed otherwise clean closings.
By the time most sellers start thinking seriously about an exit, many of the decisions that will shape their outcome have already been made. The quality of their financials, the structure of their leases, the strength of their third-party relationships, and the composition of their advisory team are all set before any buyer appears. Preparation is not a phase that begins when you decide to sell. It is the work you do in the years before that decision, so that when the moment comes, you are ready to lead the process.
Governance Feed
The Q1 2026 BizBuySell Insight Report tracked 2,345 closed small business transactions totaling $2 billion in enterprise value. Deal volume declined 1% year over year while median cash flow grew 3% to $165,256, and median revenue rose 2% to $713,404. Private equity firms, MBA graduates, and corporate professionals exiting traditional employment are entering the market in larger numbers, while new SBA citizenship rules that took effect in March 2026 have narrowed the pool of SBA-eligible buyers by disqualifying green card holders and foreign nationals. Sixty-one percent of buyers now say they want seller financing included in the deal structure, and more than half of brokers describe it as very or extremely important to closing transactions.
The lower middle market entering 2026 looks different from 2025. Deal volume fell roughly 27% through the third quarter of last year as buyers and sellers hesitated, but valuations held steady at 5 to 7 times EBITDA. Key sectors drawing the strongest buyer interest now include business services with subscription or contract revenue, industrial and manufacturing firms tied to supply chain resilience, and healthcare services.
Axial's latest analysis of 292 recently closed lower middle market transactions shows that businesses in roofing, field services, and distribution continue to attract strong buyer interest from search funds and individual acquirers, while recurring revenue and lean headcount remain the two most consistent characteristics of businesses that moved quickly. In deals where advisors ran targeted rather than broad processes, pursuit rates averaged above 60%, suggesting that buyer-seller fit matters as much as deal exposure.
Sellers who treat a high initial offer as a final number continue to leave significant value on the table. BDO's 2026 analysis of the sell-side process notes that high initial bids frequently do not carry through the deal, and that business owners who evaluate buyers on strategic fit, track record, and ownership philosophy rather than headline price consistently reach better post-close outcomes. Buyers who can demonstrate a clear thesis and a history of closing on the terms they offer are winning deals over higher bidders with weaker signals of intent.
Thesis Principle
If you are planning to sell in the next two years, the single most valuable thing you can do right now is commission a sell-side quality of earnings report. The QoE builds your EBITDA bridge from reported net income through every add-back with documentary support, analyzes your revenue customer by customer across three years, establishes the working capital baseline that will set the peg in your LOI, and classifies each add-back as supportable, partially supportable, or not supportable. Buyers treat that classification as authoritative. Your data should be organized and ready before you take the first call with corporate documents, three years of financials, tax returns, 36 months of bank statements, customer and revenue detail, employee compensation summaries, all material contracts, leases, permits, legal exposure, fixed assets, insurance, and your operating procedures. Sellers who do this work before the process starts move faster, negotiate from a stronger position, and give buyers fewer reasons to retrade.
Resources & Events
📅 ACG Mid-South Capital Connection (Nashville, TN - May 14-15, 2026)
A two-day middle-market dealmaking conference hosted by ACG Tennessee, bringing together private equity firms, lenders, investment banks, and M&A advisors focused on active transactions. The program includes structured one-on-one meetings through ACG’s DealSource platform alongside panels and networking sessions. For participants active in the southern and mid-south U.S. markets, it provides an environment for sourcing opportunities and building relationships with buyers and intermediaries. Details →
📅 ACG NY Summer Dealmaking Conference (Montauk, NY- July 28-30, 2026)
ACG New York’s annual Summer Dealmaking Conference brings together private equity professionals, investment bankers, family offices, and strategic acquirers for curated one-on-one meetings and relationship-driven networking. The event combines DealSource meetings with smaller group interactions. For participants active in the Northeast, it offers access to a dense network of senior dealmakers and active buyers. Details →
📊 Report Spotlight: 2026 M&A Deal Terms Study (SRS Acquiom)
SRS Acquiom’s 2026 M&A Deal Terms Study analyzes more than 2,300 private-target acquisitions totaling $569 billion in value, providing a detailed view of how deal structures are evolving across the market. The study highlights continued changes in how risk is allocated between buyers and sellers, with increasing attention on earnouts, escrow usage, and indemnification frameworks. It also points to the growing impact of more intensive diligence on how terms are negotiated, particularly around post-closing protections and payment structures. Read →
For the Commute
$1M Business Breakdown of Buying a CEO Networking Club Franchise (Acquisitions Anonymous)
In this episode, the hosts break down a $1M acquisition of a CEO networking club franchise and examine the model's underlying economics. The discussion focuses on key risks, including founder dependence, customer acquisition challenges, and whether the buyer is effectively purchasing a scalable business or a full-time operating role. It also highlights how recurring revenue models can appear attractive but depend heavily on retention and consistent member engagement. The episode provides a practical view of how to evaluate business models where value is tied more to execution than to underlying assets.
