10/19/2026
“At the end of the day, a roll-up is simple, but it’s not easy.” Sahil Chaudry
The new episode of Letters of Intent is out. Pankaj Raval and Sahil Chaudry break down the private equity roll-up, a strategy Sahil describes as driving a huge percentage of middle-market private equity deals right now.
The math starts with one business. A regional HVAC company earning $1 million in EBITDA (earnings before interest, taxes, depreciation, and amortization, a standard measure of operating profit) might sell to a local buyer at 4X, or $4 million. In the hosts’ example, a private equity sponsor buys twenty shops like it, combines them into one $20 million EBITDA platform, and sells to institutional buyers at 12 to 15X.
Same earnings. A $240 million to $300 million valuation instead of $80 million. That gap is called multiple arbitrage: larger, more predictable companies command a higher multiple of earnings than small ones carrying key-person risk.
The episode also covers what founders on either side of these deals should understand, from rollover equity to why many roll-ups fall apart after closing.
This post is for informational purposes only and does not constitute legal advice.
Listen to the full breakdown, and reach the team with questions at carbonlg.com
Carbon Law Group, Los Angeles, Los Angeles County