SELF FUNDED SEARCH - HOW TO PRICE THE EQUITY?

I’ve been approached by a self-funded searcher. The deal is the following for a food manufacturing company:

EV: USD 4m Debt: USD 3m Equity: USD 1m

Since the equity portion is small, he is looking for a single sponsor.
0.5m would be provided by the searcher and 0.5m from the investor (potentially me). He is offering a 20% stake.

Now I know it is all down to where we realize the exit, but still I’m wondering whether I should negotiate or just fold?

What is your experience in self-funded searches? Should I ask for[redacted]and then offer time and IRR based vesting tiers?



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