SMB M&A SERIES: Pros and Cons of Selling Your Business to a Private Equity Firm
By: Daniel J. Fetter, Esq.
The SMB M&A series provides insights into buying and selling a small business.
If you own a small business, you may have been approached by a private equity firm regarding the sale of your company. A private equity firm is an investment company that pools capital from its investors to buy and manage companies with the goal of selling for profit within 5-10 years. Our firm has been involved in a growing number of PE deals over the last several years.
The typical deal structure we see offered to small business owners is the purchase of assets in exchange for cash (around 75-85%) and equity (around 15-25%) in the new company. Owners will temporarily work at the company for a period of time to assist in the transition, and in some cases, do so for an earn-out.
What are some of the pros and cons of selling your business to a PE firm?
Pros:
- PE firms can offer an attractive purchase price and potential for significant returns.
- PE Firms tend to bring industry knowledge and have more access to resources to boost growth.
- Many structures offer Sellers with "rollover equity", i.e., equity in the buyer company. This offers owners a "second bite at the apple" if the new buyer is successful in growing the business and the value of the equity increases over time. In some cases, the rollover equity can provide tax benefits by deferring taxes that would otherwise be due in an all cash transaction. This may be beneficial for owners looking to minimize immediate tax liability.
Cons:
- Owners with rollover equity are exposed to the risks associated with the business. If the business is poorly managed by its new owners, the value of your equity can decline. We advise clients to prepare themselves for the possibility that they may never "cash out" the rollover equity.
- Your equity in buyer's company may be diluted if the company issues equity in the future (unless you are willing to contribute more cash, which is very unlikely). If your interest is diluted it could reduce future gains.
- In some cases, the buyer relies on the current owners to continue working in the business. This may not be ideal for those sellers hoping to retire.
- Owners have little to no control over the management of the business. While they may be offered a seat on the board, it tends to be a minority position with no power.
- Selling to a PE firm typically involves an extensive due diligence investigation and complex legal documents and negotiations which lead to increased transaction expenses. In some cases, PE firms are not willing to negotiate its "standard agreements" since it has used those same documents in past transactions with other acquisition targets.
The Scolaro Law Firm handles small business M&A transactions throughout New York State, Vermont, Pennsylvania and Florida. If you are interested in buying/selling a business, please contact Daniel Fetter or the attorney at our firm with whom you work.
This article is intended to be for informational and discussion purposes only and is not to be construed as legal advice or as a legal opinion on which certain actions should or should not be taken.
SYRACUSE, NY (October 8, 2025) – Two leading law firms in Central New York, Costello, Cooney & Fearon and Scolaro Fetter Grizanti & McGough, are pleased to announce their combination, effective Jan. 1, 2026. Costello Cooney Fearon & Fetter will build upon a combined 175 years of legal tradition in Syracuse while establishing a stronger foundation to serve clients across the region and beyond. This combination represents more than the joining of two firms; it marks the uniting of two longstanding legal legacies deeply rooted in the Central New York Community. From advising local businesses and municipalities to guiding families through generations of change, both firms share a common history of helping the region grow and thrive. “Bringing our firms together unites the collective strength of two highly successful practices with a shared vision for delivering the highest quality client service. This combination will allow us to offer a broader range of legal services to meet the evolving needs of our present and future clients.” – Jeffrey M. Fetter, Chief Executive Officer of Scolaro Fetter Grizanti & McGough With over 45 attorneys practicing throughout New York State, the firm will offer expanded strength in litigation, business and tax law, mergers and acquisitions, estate and trust planning and administration, municipal and education law, real estate, family law, healthcare, agricultural law, and more. “This is an important and exciting moment for both of our firms. Combining with Scolaro Fetter Grizanti & McGough strengthens the services we can provide to our clients and creates new opportunities for our attorneys and staff. Having been with Costello, Cooney & Fearon for more than 35 years, I see this as one of the most meaningful steps we’ve taken to ensure the continuity of the quality and depth of our practice and a vibrant future for decades to come. We have long respected the work of Scolaro Fetter Grizanti & McGough, and now we look forward to growing together as one firm.” – John R. Langey, Chief Executive Officer of Costello, Cooney & Fearon A Shared Legacy, A Stronger Future Costello, Cooney & Fearon has been part of the Syracuse legal landscape since 1896, known for its innovative, collaborative approach and broad range of practice areas. Founded in 1979, Scolaro Fetter Grizanti & McGough has built a respected reputation, spanning several states, for its sophisticated work in business, tax, and estate planning. Together as Costello Cooney Fearon & Fetter, the firm will continue to serve as a proud partner in the Central New York Community, offering the full-service capabilities of a large firm while maintaining the personalized attention and client relationships that have long defined both organizations. Clients can expect a seamless transition, continuing to work with the attorneys they know and trust – now backed by a deeper bench of talent and experience. Additional details about the firm’s combined operations will be shared in the coming weeks. About Costello Cooney Fearon & Fetter Costello Cooney Fearon & Fetter will be a full-service law firm with offices in Syracuse, Albany, and Cazenovia, N.Y. and Stuart, Fla. With deep roots in Central New York and serving clients throughout several states, the firm will provide forward thinking legal counsel to businesses, municipalities, educational institutions, and individuals, while remaining committed to the communities it has proudly served for generations.
Stewart M. McGough, Esq. Deed fraud is increasing rapidly in Florida. Criminals have been forging property deeds to unlawfully transfer ownership and sell properties without the real owner's knowledge. Any property owner may be affected, including homeowners, and the legal costs to reverse this type of fraud can be substantial. To help combat this risk, Florida law now requires each county Clerk of Court to provide a Property Alert Service . This free service notifies you when a document such as a deed is filed under your name or your property's legal description. Steps You Should Take Register for Property Alerts Visit the official Florida Court Clerks website: https://www.flclerks.com/page/PropertyAlertServices Choose Your County (or Counties) Click the link for each county where you own property. Complete the online registration with your name and property information. Watch for Notifications If someone files a deed involving your property, you will receive an alert by email, text, or phone depending on the county. If the filing is legitimate, no action is needed. If it appears fraudulent, contact the Clerk immediately and consult an attorney to prevent the deed from being recorded. Why This Matters Deed fraud can occur silently and without warning. Registering for alerts gives you immediate notice so you can respond before the fraud is finalized and your property is illegally transferred. Please take a few minutes to register today. This simple step can protect your property and avoid major legal complications.
