When Your Company Hits This 'Critical Mark,' Big Investors and Private Equity Will Come Calling

Want to meet the people who can accelerate your growth? There’s one critical revenue mark that will get you into make-or-break meetings.

“I think there’s something magical about a million dollars in terms of just showing progress and scalability of the business,” says Laura Held, a partner at the investment firm Shamrock Capital. She says $1 million in revenue before EBITDA — interest, taxes, depreciation, and amortization — is a noteworthy metric that puts you on the map for everyone from angel investors to debt financiers.

Marilyn Adler, a founder and managing partner at Mizzen Capital — a group that invests debt into lower middle market companies, which usually generate from $1 million to $10 million of EBITDA — says $1 million in EBITDA is the minimum a company must hit for her to even consider funding them in most cases. She says it’s also usually the minimum to be of any interest to a private equity group looking for add-on acquisitions. (This is when a buyer purchases a smaller company to incorporate into an existing business — known as the platform company — in order to make it more profitable or productive.) For example, the owner of a pharmacy chain might purchase a courier company to deliver medications. “That $1 million of EBITDA seems to be a critical mark for them to spend time on it and really make it worthwhile,” says Adler.

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