Big Story

Q&A: Andrew McConnell on Why a Short List of Acquirers May Be a Trap

Andrew McConnell built Rented, a SaaS company that helped vacation rental managers price homes the way airlines price seats, with rates moving up and down based on demand. The platform served everyone from national managers overseeing thousands of properties to local firms managing 25 to 40 homes. He eventually exited successfully, but not before learning the hard way that building a company and selling one require two entirely different skill sets.

When inbound interest started arriving in late 2020, McConnell decided to run the sale himself. He knew the industry. He knew the strategic buyers, the private equity funds already investing in the space, and the online travel platforms. He built a spreadsheet of roughly 40 potential acquirers and began working his contacts directly. 

But the process stalled. Buyers took every meeting because learning about the market is their job. They reviewed materials, discussed tentative structures, and then drifted. Without a forcing mechanism, no one moved toward a close. McConnell also found it difficult to negotiate hard against people he expected to work for after the deal. He compares it to why athletes hire agents. The person who has to maintain the relationship after closing is the wrong person to apply pressure during it.

Hiring an M&A advisor changed the process in three ways. First, the buyer list expanded from 40 names to roughly 260. A larger pool changed the dynamics inside the diligence room, and four to five serious bidders eventually submitted offers. Second, the bankers imposed deadlines. Buyers who missed a milestone were out. The buyer who had walked away during solo negotiations came back once the advisors reengaged him. Third, delegating the process let McConnell keep running the company. He notes that slowing down sales while trying to sell the business is the worst thing a founder can do, since the buyer is underwriting current performance.

McConnell also reframed the fee objection. If an advisor cannot add at least 5% to the final price, they are not doing their job, and a good one can add far more. Paying a percentage on a materially larger outcome is simple math.

Timing still cost him. Six months before his sale, comparable companies were trading at double-digit multiples of projected revenue. By the time his deal closed, market sentiment had shifted, and he received a high single-digit multiple on actual recurring revenue, landing a low eight-figure outcome as part of a private equity roll-up. The best time to sell was six months before he did, and the second best time was exactly when he did, because conditions only weakened afterward.

The lesson for owners is that a short list of known buyers feels like control but often functions as a ceiling. A structured process with a wide pool, hard deadlines, and a negotiator who is not staying on payroll is what converts interest into offers. The founder's job during a sale is to keep the business performing, because that is the asset being priced.

Governance Feed

1. Deal sourcing in the lower middle market is getting divided between proprietary outreach and competitive auction processes. While banker-led auctions remain common for larger, well-prepared businesses, many private equity firms are investing heavily in relationship-driven sourcing to identify opportunities before they reach the market. As competition for quality businesses intensifies, firms are relying on industry specialization and long-term owner relationships to gain an advantage. For sellers, engaging advisors early and building buyer relationships before launching a formal process can significantly expand the pool of qualified acquirers. 

2. ACG and GF Data’s Q3 Market Pulse Survey found that 63% of middle-market dealmakers expect M&A activity to increase during the second half of 2026, while 49% expect financing conditions to remain favorable over the next six months. Political and geopolitical instability ranked as the leading risk, followed by mismatched buyer and seller valuations, while 17% identified recession as a major concern.

3. Lower- and middle-market M&A deals often fail because small process problems accumulate until trust and momentum disappear. Misaligned expectations before the letter of intent, unfocused diligence, unclear ownership of closing tasks, and delayed decisions can turn manageable issues into pricing disputes or broken deals. Earnouts, working-capital adjustments, consents, and integration plans create further risk when they do not reflect how the business actually operates. The central challenge is keeping the transaction coordinated from initial structure through post-closing execution.

Thesis Principle

Employee communication during a sale follows a strict sequence. Before the LOI, only the owner knows the business is for sale. A spouse can be included when needed. A leak at this stage carries nearly all downside because there is no deal certainty yet. After the LOI is signed, one or two key managers may be read in under NDA to support diligence. Bring them in with a stay bonus that vests at close so their incentive is to finish the deal. The all-employee announcement comes 1 to 2 weeks before close. Time it deliberately and script it in advance. Lead with continuity and opportunity rather than change. The new owner should participate when willing.

Resources & Events

📅 Smart Business Dealmakers D.C. Capital Region (Westwood Country Club, VA - September 17, 2026) 

The D.C. Capital Region Smart Business Dealmakers Conference brings together middle-market CEOs, private equity investors, lenders, corporate development leaders, and M&A advisors for a full day of discussions on buying and selling businesses, raising capital, transaction preparedness, and post-close value creation. With dedicated sessions on both the buy-side and sell-side, the conference offers business owners and advisors insights into today's deal environment while providing opportunities to connect with active investors and strategic acquirers. Details →

📅Smart Business Dealmakers South Florida (Lauderdale Yacht Club, FL - November 12, 2026)

The South Florida Smart Business Dealmakers Conference convenes middle-market business owners, private equity firms, lenders, investors, and M&A advisors for a day focused on business sales, capital strategy, valuation, and transaction execution. Designed for entrepreneurs preparing for an ownership transition and advisors active in the region's deal market, the program combines panel discussions with structured networking, offering attendees direct access to buyers, capital providers, and experienced deal professionals before year-end transaction activity accelerates. Details →

📊 Report Spotlight: Small Business in Seconds (SBA Office of Advocacy)

The Office of Advocacy's latest economic bulletin shows the prime rate, which sets the cost of most small business loans, holding steady through the first quarter of 2026 after declining through the end of 2025. The share of small business financing applications that were fully approved remains near 52%, with small banks more likely to fully approve than other lenders. Community bankers expect a lighter regulatory burden ahead, with the Regulatory Relief Index at or above 100 for a sixth consecutive quarter in early 2026. Delinquency rates on commercial real estate loans and commercial and industrial loans remain low, pointing to a stable credit backdrop for SBA-financed deals. Read →

For the Commute

Risks That Can Sabotage Business Transfers (The M&A Mastermind Podcast)

Laurie Barkman, an exit strategist and author of The Business Transition Handbook, walks through the risks that derail ownership transfers, including owner dependency, a thin employee bench, and poor timing of communication during an exit. She explains how building transferable value works in practice, how succession planning reduces buyer concerns, and how owners should weigh internal transfers against an external sale. Barkman also covers the tools and resources owners can use to assess their readiness before starting a process.