There is a conversation Jake Brydon has had more times than he can count.

A roofing company owner has built something real. The business is generating solid revenue. The owner has put in years of work, made countless sacrifices, and arrived at a number that feels significant enough to consider cashing out. A private equity firm comes calling, throws out a figure that makes the owner’s eyes widen, and suddenly, the idea of liquidity starts feeling like the finish line.

Jake’s response to that moment is always the same. Before you sign anything, let’s talk about what you are actually giving up.

The Illusion of Liquidity

Jake Brydon is not opposed to selling a business. He is opposed to selling one for the wrong reasons, at the wrong time, without fully understanding what the proceeds will and will not do for your life.

To make this concrete, he walks people through a thought experiment.

Imagine $7 million lands in your account tomorrow. What happens next? Most business owners in that position think about the house they have always wanted. Maybe a boat. A nicer car. A club membership that they previously could not justify. The purchases feel earned, and the spending feels reasonable given the number in the account.

But Jake tracks where that $7 million actually goes in practice. A dream house on the water runs $2 million or more, depending on the market. A serious vehicle adds another $150,000. A boat capable of matching that lifestyle adds $250,000 or more. By the time the initial purchases settle, the account is already halfway gone, and the owner is in their late thirties or early forties with decades of life ahead and a shrinking pile of capital that no longer has a business behind it to replenish itself.

That is when the math gets uncomfortable.

The $5 Million Business Versus $50 Million in the Market

Jake makes a comparison that stops most people cold when they first hear it.

If you own a $5 million revenue business that throws off the cash you need to live well, and you want to replace that cash flow through investment returns alone, you would need roughly $50 million invested in the market to generate an equivalent income stream at a reasonable return rate.

Most business owners selling a $5 million operation are not walking away with $50 million. They are walking away with a fraction of that. Which means the moment the sale closes, they have permanently downgraded their income-generating capacity while simultaneously eliminating the one asset they actually controlled.

As Jake puts it, you are trading equity in a company you own 100 percent and have full control over for small fragments of companies you will never influence. The S&P 500 does not return your calls. It does not reward your judgment or your industry expertise. It simply compounds at a rate that, for most people, will not come close to replacing what a well-run operating business was generating.

The only scenario in which that trade makes sense, in Jake’s view, is if the liquidity event is large enough that the proceeds themselves constitute a significant asset base. For most operators at the $5 to $10 million revenue range, that threshold is simply not being reached.

The Golden Goose Problem

Jake describes this dynamic using a straightforward framework that is rarely applied with sufficient discipline in practice.

The business is the golden goose. It produces the eggs, meaning the cash flow, that funds everything else. The lifestyle, the investments, the personal assets, all of it flows from the goose continuing to operate.

When an owner sells, they are not just taking the eggs. They are selling the goose itself. And once it is gone, the eggs stop coming. Whatever liquidity was received in the transaction has to fund the lifestyle and replace the income-generating function the business was performing, simultaneously, from a fixed pool of capital that moves in only one direction.

Jake watched this dynamic play out clearly in his own decision to decline a private equity offer years ago. The firm laid out a plan to take his roofing business from a $20 million valuation to $50 million within two years. Their roadmap was detailed and credible. Jake’s response was not to take the deal. It was to take the playbook and execute it himself.

Since declining that offer, he has grown the business on his own terms, without giving up ownership, without answering to a new employer, and without trading his equity for a fixed payout he no longer controls. 

What Private Equity Actually Looks Like From the Inside

Part of why Jake pushes back so firmly on the liquidity narrative is that he understands what a partial sale actually means for an owner’s day-to-day reality.

Most founders who sell to private equity do not sell 100 percent. They take a partial exit, retain equity, and remain involved in the business as part of the deal structure. The logic sounds appealing: get some liquidity now, keep upside in the future, let the PE firm’s resources accelerate growth.

The reality, as Jake describes it, is that you have just done a cash-out refinance on your own business and handed the keys to a new employer. The meetings multiply. The reporting requirements intensify. The decisions that used to be yours to make unilaterally now require approval, justification, and alignment with a firm whose timeline and objectives may not match yours. You are working harder than before, with less control than before, for a boss you did not have before.

For someone who built a business specifically to avoid that dynamic, it is a significant trade-off for the sake of seeing a number hit your account.

The Smarter Path Jake Actually Recommends

Jake’s alternative is not to avoid wealth building. It is to use the business as the vehicle for it rather than the asset to be liquidated.

He applies this principle directly in his own life. The ranches, the aircraft, the lifestyle that most people assume requires a major liquidity event to access, he has built all of it through cash flow rather than through a sale. The business justifies and funds assets that appreciate or provide utility. The overhead of those assets becomes part of the business’s cash flows, which in turn requires the business to scale enough to support them, making the business worth more in the process.

It is a compounding loop rather than a one-time conversion. And, critically, it does not require giving up the asset that generates everything.

His advice to owners who are sniffing around private equity because they want to know what their company is worth is to get a valuation for the information, understand the number, and then use that number as a growth target rather than a sale price. If a firm tells you the business is worth $20 million today and could be worth $50 million in two years with the right moves, the correct response in most cases is to make those moves yourself.

When Selling Is Actually the Right Answer

Jake is careful to distinguish between selling for the wrong reasons and selling from a position of genuine strength.

If the business is hard, if growth has stalled, if the operator is burned out and looking to exit the difficulty rather than success, the sale will reflect that. Buyers doing diligence will find every crack in the foundation and use each one to negotiate the price down. The process will be brutal, the outcome will be disappointing, and the owner will likely walk away with significantly less than they imagined.

But if the business is genuinely performing, margins are strong, systems are in place, the operator has solved the problems rather than avoided them, and the sale is motivated by a desire to de-risk a substantial asset rather than escape a struggling one, that is a different conversation entirely. That is the scenario in which a bidding process is possible, leverage exists, and the proceeds are actually large enough to matter.

The point is not to never sell. The point is to build something so valuable that selling becomes optional rather than necessary, and to fully understand the true cost of converting a cash flowing asset into a fixed pool of capital before making that decision permanent.

For most operators Jake talks to, that understanding alone is enough to change the conversation entirely.

Disclaimer: All information provided is for general informational purposes only and should not be construed as financial advice. Always consult with a qualified financial advisor or professional before making any business or investment decisions.