Preparing your business for sale: what a buyer challenges first
In brief. A buyer does not pay for reported EBITDA but for the EBITDA it considers recurring, minus everything it treats as debt. Preparing a sale means finding those adjustments before the buyer does, in a vendor due diligence, so the price is defended rather than negotiated down.
Four points that lower the price
| Point | What the buyer looks for | Effect on price |
|---|---|---|
| Quality of earnings | One-offs, off-market owner pay, provisions | Multiple applied to lower EBITDA |
| Net debt | Tax and social liabilities, earn-outs, debt-like items | Deducted in full |
| Working capital | A 'normal' reference level | Adjustment at closing |
| Risks | Disputes, compliance, dependence on a client or the owner | Warranties, escrow, earn-out |
A worked example
A business reports EUR 8 m of EBITDA. The buyer removes EUR 0.6 m of one-offs: at 8 times, value falls by EUR 4.8 m. It adds EUR 1.5 m of debt-like items: the price falls by another EUR 1.5 m. A vendor due diligence documents, explains or corrects these points before they become negotiation arguments.
The preparation timetable
- 12 to 18 months before: accounts, contracts and governance in order.
- 6 months before: vendor due diligence and a defensible business plan.
- At launch: information memorandum, data room, buyer selection with the M&A adviser.
- During negotiations: review of every offer and every draft, on the seller's side.
Wealth decisions to take first
Contribution to a holding, gifts before the sale, what happens to the real estate: these must be decided before a letter of intent is signed, or they become impossible or risky.
Our role
We come from transaction services: we know what a buyer will look for. We prepare the company, document the adjustments and review every offer with the owner, alongside the M&A adviser and lawyers.
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Request a reviewThis guide is general information. It is not investment, legal or tax advice. The rules quoted must be checked by your advisers before any decision.