The most consequential work in a sale process happens before a buyer is ever contacted. By the time a counterparty is at the table, most of what will determine the outcome has already been decided.
This is inconvenient, because businesses typically start thinking about a transaction when one becomes imminent — which is precisely when the preparation window has closed.
Six things that move value
1. Quality of earnings
Buyers pay differently for the same reported profit depending on how it is composed. Recurring, contracted, diversified earnings are valued more highly than earnings dependent on one-off events, favourable timing or adjustments requiring explanation. Improving quality of earnings takes time; presenting it clearly takes preparation.
2. Customer concentration
Heavy dependence on a small number of customers is one of the most consistent drags on valuation, because it is a risk the buyer inherits and cannot easily mitigate. It can be contextualised — contract length, switching costs, relationship depth, tenure — but it cannot be argued away.
3. Promoter dependency
Buyers assess how much of the value walks out of the door with the seller. Where key relationships, technical knowledge and decision-making all run through one person, the business is worth materially less to anyone else.
Building a management layer that operates independently is slow, which is why it is the clearest argument for starting preparation years rather than months ahead.
4. Contract and record documentation
Customer agreements, supplier terms, employment contracts, leases and IP ownership — documented, current and assignable. Undocumented arrangements that function perfectly well in practice become diligence findings, and diligence findings become price adjustments or indemnities.
5. Compliance position
Statutory, tax and regulatory matters resolved rather than disclosed under pressure. A buyer discovering an unresolved matter mid-diligence will price it conservatively, because they are pricing an unknown.
6. Corporate structure
Clean shareholding, comprehensible group structure and documented related-party transactions. Complexity that made sense historically often has no rationale a buyer will accept, and unwinding it during a live process is disruptive and expensive.
On valuation expectations
Valuation is a negotiated range informed by analysis, not a figure produced by a formula. Earnings multiples, discounted cash flow, asset-based approaches and comparable transactions rarely agree, and each can be argued.
What most affects where you land within the range is qualitative: predictability, transferability, concentration and the credibility of the forward plan. A business that can evidence those negotiates from a stronger position than one relying on a multiple observed elsewhere.
Sellers frequently anchor to a headline multiple from an unrelated transaction. Buyers price the specific business in front of them, including everything diligence revealed.
Process discipline
How a process is run affects the outcome nearly as much as what is being sold.
- Confidentiality by design. Staged disclosure, agreements before meaningful information, and careful control of who knows and when.
- Genuine parallel interest. Not to manufacture pressure, but because a single counterparty knows they are the only option and prices accordingly.
- Momentum. Processes that drift lose value. Delays invite renegotiation and give circumstances time to change.
- No surprises. Anything material is better disclosed early and contextualised than discovered late and priced defensively.
On the buy side
The equivalent discipline is defining acquisition criteria before opportunities appear — what capability, geography or capacity you are buying, what you will pay for it, and what integration will require. Businesses that assess opportunistically tend to acquire reactively, and integration is where the rationale is either realised or lost.
The honest caveat
Transactions depend on both parties agreeing, on diligence findings, on regulatory clearances where applicable, on financing and on market conditions. Any of these can end a process that was progressing well. Preparation improves the probability and the terms. It does not determine the outcome, and anyone suggesting otherwise is describing something they cannot deliver.