Sell Like An Institution: Valuation, Deal Structure And The Art Of Being Ready

Owners of small and mid-sized businesses usually experience one transaction in a lifetime, while buyers may do several a year. That asymmetry — not the price — is what costs sellers money. Applying institutional deal discipline levels the field.

How Value Is Actually Formed

Most private businesses trade on a multiple of normalised earnings. Two variables drive the outcome: the quality of the earnings and the risk attached to them. Concentration in one customer, owner dependence, undocumented processes and messy financials all reduce the multiple, regardless of headline revenue.

• Normalise earnings: remove one-off items and owner benefits, and add back non-commercial expenses with evidence.
• De-risk the story: contracted revenue, diversified customers, a second layer of management.
• Clean the records: reconciled accounts, current lodgements, documented related-party arrangements.

Structure Is Half The Price

Two offers at the same headline number can be worth very different amounts after structure. Cash at completion versus deferred consideration, earn-outs tied to performance, vendor finance, escrow and warranty caps, share sale versus asset sale, and how working capital is adjusted at settlement all move real value between the parties.

Negotiate the structure with the same energy you negotiate the number — that is where deals are won or quietly lost.

Funding The Acquisition

Acquisition funding usually blends business lending secured against assets or cash flow, equity released from property, and vendor finance. Lender appetite depends heavily on the target's earnings quality and the buyer's experience in the industry, so funding conversations should start before an offer is made — not after.

A Disciplined Process

• Preparation: financial clean-up, normalisation, information memorandum.
• Market: a controlled approach to a shortlist of credible buyers or targets.
• Negotiate: heads of agreement covering price, structure and exclusivity.
• Diligence: financial, tax, legal and operational verification.
• Fund and complete: facilities documented, conditions satisfied, settlement coordinated.
• Integrate: the first 100 days determine whether the thesis is realised.

Our Role

We run the process end to end and coordinate with your accountant and legal adviser so tax, structure and funding decisions are made together rather than in sequence. General information only.