Carl Allen's math starts with $210,000.

That's a potential down payment on a single $4.2 million business, bought with an SBA loan at about 5% equity down (assuming seller finance covers the other 5% given the new SBA rules of putting 10% down).

Now, add 2 more acquisitions, 2 years of work, and some outside investor money, and his model ends with a company worth roughly $114 million and $101.9 million of equity value.

Carl walked through this math live at last year's Business Acquisition Virtual Summit, and his message was blunt:

"You're only one deal away from seeing a 9-figure exit inside of just 2 or 3 years."

Carl has earned the right to say that…

He's been buying and selling companies for 33 years, starting in M&A at Bank of America, and retired from Wall Street at 37 to do his own deals. He's been involved in nearly 500 deals personally, owns 26+ companies, and estimates he's looked at about 25,000 businesses. His community has coached nearly tens of thousands of students, and its “proteges” have done almost $1 billion of deals in the last three years.

His story started with a difficult loss:

When Carl was 15, his father died of a heart attack at 40, and that night customers came to the house and emptied the garage of supplies from his dad's small electrical contracting business. Nothing in it was built to be sold, and Carl has worked on that problem ever since.

Here's how he builds 9-figures out of small companies (and what you can take from it):

"I don't do small deals," Carl says. Laundromats and coffee shops are out "because you are basically buying a job. All the businesses and processes are trapped inside the owner's head."

Bigger is actually easier, he argues: "They have management teams, they have better data, they have more reputation, they have more diversity of customers and products."

His own bar is at least $300,000 to $400,000 of EBITDA. For others earlier in the journey, his advice was a minimum of $1 million in revenue and 20% margins, valued on EBITDA once the owner has left, not the SDE number a broker hands you.

If the owner is the business, you can't get the profit out without working inside it yourself.

By Carl's numbers, 99% of businesses are below $10 million in revenue. Yet 92% of the capital available for deals is aimed at the mid-market, and only 8% at smaller companies.

That's why small businesses typically sell for 2-4x earnings. Combine several into one larger company and you cross into a market with crowded buyers and scarce sellers, which Carl calls "a feeding frenzy."

At about $10 million of EBITDA, he says, the big trade buyers and large private equity firms come looking for you.

The roll-up is your bridge from buying at 4x to selling at 8x to 10x.

Here's his e-commerce example:

Deal 1: A $7 million revenue business making just over $1 million in profit, bought at 4x for about $4.2 million. With an SBA 7(a) loan, he says you can get away with about 5% down: $210,000.

Deals 2 and 3: Raise about $4 million in equity and buy a $9 million and an $11 million revenue business at 15% margins for 5x: $6.75 million and $8.25 million. These are above the SBA's $5 million cap, so senior lenders will want 20% to 25% down.

Then pull 2 levers:

After year one: $32.4 million of revenue and about $10.4 million of EBITDA. At roughly 8x, that's an $83 million enterprise value, or about $67 million of equity after $15.24 million of debt.

Grow 10% in year two and EBITDA reaches about $11.4 million. At 10x, that's about $114 million, and with debt down to around $12 million, equity lands at $101.9 million. By Carl's math, that's 26.1 times invested capital and a 411% IRR over two years.

"If there's one thing you take away from this presentation, it's that you need to play the game of shareholder value," he says.

Notice that almost none of the value came from the first deal. It came from combining the companies, cutting the overlap, and selling into a higher multiple.

In a healthcare services roll-up, Carl's group bought 3 companies with about $19.3 million of revenue and roughly $7.9 million of pro forma EBITDA. They paid about $23.8 million, using $6 million of equity at closing.

Twelve months later, the combined business was doing about $10 million of EBITDA, which he puts at nearly $75 million of shareholder value. They plan to keep growing for five or six years toward a $200 million to $250 million company.

He also shared the one that got away. His first protege to do a roll-up, Michael Scott, raised about $3.4 million, bought three medical cannabis businesses, and exited for about $110 million, a 32.4x return. Carl coached him but declined to invest.

"The secret of a roll-up is buy companies that have the same customer avatar, that have different products and services," Carl says. Selling to customers you already own costs nothing to acquire.

Then find what each company does best. In one of his e-commerce roll-ups selling to women, the haircare brand had cracked TikTok, the supplements brand had the best 3PL, the skincare brand owned Instagram shoutouts, the nail brand sold entirely through YouTube, and the eye-care brand wrote the best sales copy. Now all 5 do all 5 things.

"Every single one of those businesses has always done one thing incredibly well," he says. "It might do a hundred things terribly, but it's always got one thing that it's known for."

In diligence, ask every target what it does better than anyone else. That's the thing you'll spread across the group.

"Capital is the number one thing that you need to do a rollup," Carl says, and equity matters most: "For every dollar of equity you can raise, the bank's gonna give you at least $3 of debt."

So think like the investor…

On his first day at a private equity fund, Carl was told to throw away 95% of a boardroom full of pitch books. The rule: "If you can't answer these 5 questions in under 60 seconds, throw the pitch book in the trash."

Don't skip the last one. Investors will take a lower return at lower risk first, so your pitch has to de-risk the deal.

"Deal flow is the holy grail," Carl says. By his count, about 206,000 US businesses sold in 2024, and only about 20% were broker deals. "If you're only ever gonna look at broker deals, you're only looking at like one fifth of the market."

His four channels:

This week, call one CPA in your target market, say you're shopping for an accountant, and tell them exactly what you want to buy.

Carl is back on stage at this year's Business Acquisition Virtual Summit (November 20-21) talking about his new “lily pad” roll-up strategy. Early bird tickets are just $97, so discover how to take action on these ideas & tap here to get $60 off and save your seat.

As Carl put it: "Execution trumps the knowledge every single day."

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