What are Multiple Bites of the Apple?

What are Multiple Bites of the Apple?

Matt Gilbert

September 26, 2022

Many business owners mistakenly think of selling their business as a one-and-done event. In reality, most sales of privately-held businesses involve complex deal structures and often keep the selling shareholder(s) involved post-closing in a number of ways. If you start researching what to focus on when selling your business, you’ll likely run into the term “multiple bites of the apple” or some variation thereof. Let’s explore what this means and why it could be a great strategy for you to consider.

Multiple Bites of the Apple

In plain speak, “multiple bites of the apple” simply refers to the act of selling ownership in your business in separate stages, often several years apart. It usually means selling only a controlling interest during the first sale event. Because you aren’t selling 100%, you are “rolling equity” and become a minority partner. The second stage or “second bite” happens during a subsequent sale of the business when you totally exit the company.

As a transaction advisory firm, we introduce many of our clients to buyers who invest the first institutional capital their business has ever taken. This typically means a private equity group (or other similar entity) acquires controlling interest in the business and becomes the owner’s financial partner. The arrangement is usually such that the owner selling a stake (often called “taking some chips off the table”) will stay involved in the company to oversee execution of the day-to-day activities. Generally, the new shareholder will help determine strategy, banking, credit, insurance, risk, growth initiatives, back-office support, and other high-level duties that tend to bog down owners and their management teams. This is all agreed to with the belief that freeing the owner and management team from these tasks will allow them to engage operationally at a deeper, more effective level which, in turn, will enable the business to experience significant growth. In our April GaP Insights, we covered the Best Ways to Grow a Business in 2022.

Let’s use an example of an owner selling an 80% controlling interest.

First Bite

Stage one is typically a significant liquidity-capturing event for the owner(s) personally. The wealth created on paper through business ownership is realized when a sizable check is traded for a controlling equity position in the business. The owner’s involvement may have several agreed-to ties such as an employment agreement, a shareholder agreement, a consulting agreement, a performance-based earn out, a Board seat, a creditor agreement (if the owner financed a portion), and a landlord agreement.

The buyer and seller will then navigate business expansion for a few years with a clearly-defined, predetermined growth objective. When the growth (or time-based) objective is nearing, they ready the business to be sold again.

Second Bite

The second bite happens when the owner and the institutional partner complete the sale of a significantly larger and more sophisticated business. Most often this sale is the point where the owner steps aside and lets the professional management team put in place take over the reins of the company. This bite – selling the remaining 20% in our example – is often as lucrative, if not more so, for the owner than the first sale of 80% because the owner and institutional partner have successfully executed a growth plan to make the business larger and more profitable. It is the equivalent of a small piece of a larger pie being worth the same as a large piece of a smaller pie.


In practice, there are a multitude of variations to this strategy. But it is a popular approach to buying and selling a privately-held business because it de-risks the purchase for the buyer and clearly defines a stair-stepped exit path for the business owner.

The M&A space is filled with industry-specific jargon and idioms and “multiple bites of the apple” is just one of them. Although seemingly simplistic, it is a long process that requires the right insight and execution.

If any of this resonates with you, we encourage you to take our M&A Discovery Questionnaire and talk with us to see if your business makes the cut as one who can still command a great exit in this M&A environment. We will be in touch quickly to discuss the results. Click here to take the assessment.

Gilbert & Pardue Transaction Advisors (GaP) is a Houston-based business advisory firm serving lower middle market and middle market business owners from coast to coast through representation for Mergers & Acquisitions (M&A).

Matt Gilbert and Bret Pardue established GaP to provide owners of lower middle market and middle market businesses – those businesses generally enjoying annual revenue of $10-$80 million – with the quality of M&A representation and value-enhancement services previously only available to upper middle and large businesses. GaP brings highly experienced executives, sophisticated financial and marketing products, proven-effective processes, and fully-integrated expertise to every engagement. No other M&A firm serving the lower middle and middle markets provides the quality of representation and transactional expertise that we do.

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