How to Execute Mid-Market M&A: A 7-Step Guide for $500K–$10M Business Owners

Mid-Market M&A

You don’t need a background in finance to build a seven-figure acquisition portfolio. What you need is a system—a repeatable, numbers-backed, risk-aware method to source deals, structure offers, and buy small to mid-sized businesses the smart way. This guide delivers that system.

We’ll walk through seven tactical steps to execute successful mid-market M&A, targeting businesses with $500K to $10M in annual revenue. Then we’ll show you how one team—Glow Investment Group—used this exact playbook to submit a structured offer on a profitable medical spa. You’ll see real numbers, offer structures, and the actual logic behind their LOI.

This is not theory. This is a map.

Step 1: Define Your Investment Thesis

Before sourcing deals, get specific:

• What industries are you targeting?
• What size of business fits your operating capacity?
• How much leverage can you deploy?

Glow Investment Group’s thesis:

• Acquire five medical spas over 24 months.
• Use SBA debt for first 2–3 acquisitions.
• Target EBITDA range: $500K–$1.5M per location.
• Maintain minimum Debt Coverage Ratio (DCR) of 1.8.
• Preserve at least $300K in annual post-debt cash flow.

Step 2: Build Proactive Deal Flow

Waiting on brokers to come to you is not a strategy. You must build a pipeline:

• Identify brokers who list businesses in your vertical.
• Create a VA system to reach out to business owners who meet your criteria
• Send a short, sharp outreach email introducing your thesis.
• Set a regular cadence of follow-ups.
• Track responses, listings, and seller behavior in a CRM or spreadsheet.

Glow built a “broker beat,” systematically mapping out who controlled listings in the medspa space. Over time, this created a deal flow engine that produced off-market opportunities—like the $939K EBITDA spa featured in this case study.

Step 3: Model Deals Using Cash Flow and DCR

Forget paper profits. Cash flow after debt service is the real metric. Build a simple model with:

• SBA terms (10% down, 10-year amortization)
• Target EBITDA and multiple
• Add-backs for non-recurring expenses
• Stress testing at 20% revenue drop

Glow’s target deal:

• $939K TTM EBITDA
• Seller asked for 6× ($5.6M)
• Debt Coverage Ratio (DCR): 1.0
• Glow offered 3.2–3.4× ($3M–$3.2M)
• Resulting DCR: ~2.4
• Post-debt cash flow: $500K+

This gave them the margin they needed to fund operations and handle surprises.

Step 4: Evaluate Risk and Deal Adjustments

No two deals are the same. Analyze:

• Key person risk: Will the business collapse if the founder leaves?
• Customer concentration: Is revenue diversified?
• Regulatory exposure: Is the industry facing new rules?
• Add-back reliability: Are expenses really “non-recurring”?

In this case:

• The seller’s spouse ran operations and was staying on post-close.
• The medical director was secured for 12 months.
• Only 10–15% of revenue came from weight-loss treatments, minimizing regulatory volatility.
• Add-backs included owner perks like cable and car—easily verified.

Glow used this clarity to justify their offer and draft protection clauses into the LOI.

Step 5: Structure Your LOI with Precision

Your LOI should reflect both numbers and narrative. Include:

• Purchase price and multiple (e.g., 3.2× TTM EBITDA)
• Financing mix: SBA debt + seller note
• Employment terms for seller or key staff
• Licensing transition requirements
• Hold-backs or performance-based payouts

Glow’s offer:

• ~3.2× multiple on $939K EBITDA
• 60% SBA debt, 40% seller note
• Seller spouse remains as operator, salaried
• MD license transition included
• Hold-back clause tied to staff retention and EBITDA target

The LOI gave Glow flexibility while signaling professionalism to the broker and seller.

Step 6: Drive the Negotiation with Speed and Status

The best M&A buyers aren’t desperate, they’re decisive. Glow led with:

• Cash-backed offer
• Clear justification of valuation
• Proof of financing capacity
• Limited timeline
• Willingness to walk

They presented the LOI within days, spoke directly to the seller (not just broker), and used urgency to create deal momentum. This minimized haggling and protected their position as the serious buyer.

Step 7: Prepare for Integration and Scale

Once accepted:

• Begin due diligence: financials, contracts, staff reviews
• Finalize financing: confirm SBA and seller note terms
• Outline transition plan: staff roles, licenses, systems
• Track performance vs model

Glow’s post-close plan:

• Keep spouse-operator at existing salary
• Transition MD license with renewal clause
• Reserve funds for staff training and unexpected gaps
• Reassess DCR and cash flow 90 days post-close

This wasn’t a one-off. It was the first move in a portfolio strategy designed to create a $10M+ EBITDA roll-up in 24–36 months.

Glow Investment Group Case Study Snapshot

What You Can Do Now

1. Define your target industry and EBITDA range.
2. List 10 brokers in that space and reach out today.
3. Build your deal model using real SBA loan terms.
4. Create an LOI template with your structure preferences.
5. Review Glow’s offer logic and adapt it to your vertical.
6. Start screening businesses. Quickly. Systematically.

Conclusion: M&A Isn’t Complicated—It’s a System

Glow Investment Group didn’t succeed by having insider knowledge. They succeeded by committing to a process, learning fast, and acting with discipline.

You can do the same. The seven steps outlined here are battle-tested. They give you the tools to execute mid-market M&A with confidence, precision, and speed.

The next move is yours.