When Aaron Leibtag first came on Built to Sell Radio, he had just sold a controlling stake in Pentavere, his bootstrapped healthcare AI company, for $15 million. Fifteen employees. Roughly a million dollars in revenue. No venture capital. The episode became one of the most popular Built to Sell Radio has ever run.
What that headline number did not reveal was the structure underneath it.
Aaron and his partners did not walk away with $15 million in cash. They took a mix of cash and stock in the acquirer, publicly traded HealWell. They rolled 49% of their equity into the new entity. And the buyer held a three-year call option on the rest, priced at the greater of a fixed amount that stepped up each year, or a multiple of gross profit if the business outperformed.
In other words, the $15 million headline was the easy part to describe. Everything underneath it was a negotiation about three different things: what currency the buyer would pay in, how Aaron would stay tied to the upside after giving up control, and what rights either side had to unwind the relationship later.
Aaron is back on the show because the second tranche has now closed. HealWell exercised their option in year two. The Pentavere name was officially retired the day before this episode was recorded. Aaron is now part of HealWell, and he can speak openly about how the structure actually played out.
In this episode, you’ll learn:
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Why the $15 million headline number is the least interesting part of Aaron’s deal
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How to negotiate the right to sell your acquirer’s stock immediately instead of accepting a hold period
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Why an equity roll can be a cleaner alternative to an earn-out
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How a buyer-side call option with a fixed-price floor that steps up each year protects the founder
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Why Aaron now says he would have taken all stock instead of the cash and stock mix he negotiated
The conversation also goes somewhere personal. During the second tranche of the deal, Aaron’s young son was diagnosed with a rare brain tumor. He talks about how that experience shaped the negotiation, and how the work he had built at Pentavere ended up helping his own family.
Watch the full interview below.
Quote of the Week
We can talk about the headline, but those headlines are only as valuable as the other considerations associated. Are you locked down? Are there disclosures? Is there vesting? You can read the headline, yet if you can’t trade the shares, you can’t participate in that upside.
Deals
A&B Aerospace, a California-based precision aerospace manufacturer founded in 1948 that makes high-tolerance parts and assemblies for customers including Boeing, Honeywell, and Moog, was acquired by PMGC Holdings for $4.5 million. The company generated approximately $5 million in revenue and $610,000 in EBITDA over the trailing twelve months, implying an acquisition multiple of roughly 0.9x revenue and approximately 7.4x EBITDA.
