How to Size a Roll-Up Fund for 5 Acquisitions in 2026

This article is general information, not legal, tax, securities or investment advice. Laws, rates and programs change, and the details here may no longer be current. Confirm anything you plan to act on with your own counsel and accountant.

The Problem Most Roll-Up Buyers Face

You close your first acquisition and the fund is already half spent. Now deal two is live, deal three is in due diligence, and you have no committed capital for either. This is the most common failure mode in multi-acquisition plays. The fund was sized for one or two deals instead of the full platform.

The fix is not more investors. It is a sizing model that accounts for the real cost of each acquisition, not just the purchase price. Below is the framework buyers use to size a fund for five acquisitions without running dry at deal three or four.

Step 1: Model the Full Cost Per Acquisition, Not Just the Price

A $2M business acquisition rarely costs $2M. Between SBA loan fees, seller note down payments, closing legal, and working capital, the true capital call is typically 60 to 70 percent of the purchase price in equity. Add a 25 to 40 basis point legal and diligence fee, and your per-deal equity requirement climbs.

For a $2M target with 30 percent SBA 7(a) debt at 25 percent down, the stack looks like this:

• SBA 7(a) loan: $600,000 (30 percent)
• Seller note or backstop: $300,000 (15 percent)
• Investor equity: $1,100,000 (55 percent)
• Legal, diligence, and closing fees: $80,000 to $120,000

Your true equity outlay per deal is closer to $1.2M. Model that number, not $1.1M.

Step 2: Determine Your Deal Velocity and Timing Gaps

A five-deal roll-up does not close in five months. Most buyers spend 45 to 90 days per deal between LOI, due diligence, and closing. That means your fund needs to cover at least three simultaneous deals in flight. Capital is committed at closing, not at LOI, so you need enough equity runway to bridge the gap between deal two closing and deal four signing.

Practical rule: size the fund for the number of deals you can have open simultaneously, plus one buffer. If you can have three deals in diligence at once, your fund must carry equity for four of them before the first post-closing cash flow kicks in.

Step 3: Account for Platform-Level Fees and Dilution

A roll-up is not five independent SPVs. It is a parent holding company with five subsidiaries. That structure creates its own cost layer:

• Parent entity formation and annual maintenance: $5,000 to $15,000
• Holdco-level management or consulting fees: 1 to 2 percent of invested capital annually
• Carry allocation across deals: typically 15 to 20 percent of gains above a 2 to 8 percent hurdle
• Additional legal for intercompany agreements: $10,000 to $25,000 per subsidiary added

If your fund is $6M, expect $60,000 to $120,000 in platform-level fees before you close a single deal. That money does not go into any acquisition. It goes into the structure that makes five acquisitions legally coherent for your investors.

Step 4: Size the Fund for the Worst-Case SBA Approval Timeline

SBA 7(a) loans can take 60 to 120 days to close, depending on the lender and the asset. If you are using SBA debt on three of your five deals, you need investor equity committed and available before the SBA wire hits. That means your fund must be fully subscribed and capital called before you sign LOI number one.

A common error: raising $3M for the first two deals, closing deal one, then starting a fresh raise for deal three. That adds 60 to 90 days of fundraising time and often costs you the target. Size the fund once, for all five deals, and let capital flow as you close.

Step 5: Stress-Test for One Deal Falling Through

In a five-deal roll-up, at least one target will fail due diligence, lose a key employee, or have a financing contingency pull. Budget for that. If your fund is sized exactly to the sum of all five equity calls plus fees, one broken deal strands the capital with no deployment path.

Add a 10 to 15 percent contingency buffer to your total fund size. On a $6M fund, that is $600,000 to $900,000 of undeployed capital that protects you from timing slippage and one lost deal.

A Concrete Sizing Example: Five $2M Acquisitions

Here is what a clean sizing model looks like for a five-acquisition roll-up in a recurring-revenue service business:

• Per-deal equity: $1.2M (including closing costs)
• Five deals: $6.0M
• Platform fees and holdco legal: $100,000
• Contingency buffer (12 percent): $720,000
• Total fund size: approximately $6.8M to $7.0M

That number is what you put in your PPM and what you size your investor commitments against. Not $6M. Not "a few million." A specific, modeled number that tells investors exactly where their capital goes across five acquisitions.

How to Structure the Fund So It Actually Holds

The legal structure matters as much as the math. Most roll-up buyers use one of two approaches:

Single Fund, Multiple SPVs

One master fund holds all investor equity. Each acquisition gets its own SPV (limited liability company) under the parent. Investors subscribe once to the master fund and capital is allocated to SPVs as deals close. This is the most efficient structure for five deals because investors complete onboarding once, not five times.

Sequential Deal SPVs

Each acquisition is a separate 506(b) offering with its own PPM, subscription docs, and investor list. This works for two or three deals but becomes operationally heavy at five. You are raising five times, writing five PPMs, and managing five investor relationships. Most buyers switch to a master fund structure after the second deal.

For a five-deal roll-up, the single fund with subsidiary SPVs is the standard. It reduces legal costs, keeps your investor list intact, and lets you deploy capital faster as deals close.

FAQ

Do I need a separate PPM for each acquisition in a roll-up?

No. If you use a master fund structure with subsidiary SPVs, one PPM covers the entire fund. The PPM describes the investment strategy (five acquisitions in a target sector), the capital call process, and how investor equity is allocated across the SPVs. Each subsidiary SPV gets its own operating agreement, but investors do not re-subscribe for each deal.

Can I use SBA 7(a) debt across all five acquisitions in a roll-up?

You can, but SBA underwriting typically looks at the borrowing entity's debt-service coverage ratio. After the second or third acquisition, the combined DSCR of your platform may make additional SBA loans harder to qualify for. Many buyers use SBA debt on the first two or three deals and shift to cash-flow-based debt or investor equity for deals four and five.

How much carry should I charge on a five-deal roll-up fund?

Standard independent sponsor carry is 15 to 20 percent of gains above a hurdle, with the hurdle ranging from 2 to 8 percent depending on the asset class. For a service-business roll-up, 18 percent carry with a 6 percent hurdle is a common market range. Investors in roll-up funds expect to see the portfolio grow in value through operational improvements, not just acquisition arbitrage, so the hurdle should reflect the risk of five operating businesses rather than a single asset.

Should I raise the full fund before signing the first LOI?

Yes, for a five-deal roll-up. Partial funds create timing risk. If you raise $3M for two deals and need $4M more for the remaining three, you lose 60 to 90 days raising again and likely lose deal momentum. Size the full fund, get it subscribed, and let capital call mechanics release equity as you close each acquisition. Investors prefer committed capital they can see a clear deployment plan for.

Get Your Roll-Up Fund Structured Before You Sign the First LOI

If you are building a five-acquisition platform, the fund structure and capital model are not a back-office task. They are the foundation that determines whether your raise closes on schedule and whether investors stay committed through deals three, four, and five. At Raises.com, we structure the full fund: the PPM, subscription and operating agreements, capital call proformas, and a data room organized for investor diligence. The result is a legally and financially sound fund that is ready for the first capital call the moment your first SPV is formed.

Start here: https://raises.com/buy-a-business or call us directly at https://raises.com/call to walk through your roll-up sizing model.

General information, not legal, tax, securities or investment advice. Laws, rates and programs change, and the details here may no longer be current. Confirm anything you plan to act on with your own counsel and accountant.