Small Business Preparing for PE Buyout

Small business owner here with a question about potentially exploring a buyout sale to a lower market private equity firm. 

My company does ~$700K annual revenue, and a local small business competitor in the same industry also does somewhere around ~$700K. Both have been around for 10+ years with steady growth. 

I have had discussions with the guy who owns this company and we have explored a potential merger to boost our overall revenue and become a stronger candidate for a PE buyout.

Obviously there is a lot more context needed to answer such a question, but is this a common path taken by small businesses? What are some things I should consider in merging, or preparing myself independently for a potential PE buyout within the next 5 years?

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