Every owner I meet can walk me through their plant and tell me a story at every station. The customer who stayed with them through the recession. The machine they bought when the bank said no. The foreman who has been there since the second year.
A buyer walks the same floor and hears none of it. That is not cynicism. It is their job. They are not buying your past. They are buying the next five years, without you, and every uncertainty they find comes straight off the multiple.
Here is what they are actually looking for.
1. Does it run without you?
The single largest discount I see is owner dependence. If the key customer relationships, the pricing decisions, and the hard calls all run through one person, the buyer is not buying a company. They are buying a job, and they will pay for a job.
The fix is managers who decide without you, and a track record that proves it. That track record takes time to build, which is exactly why it is so valuable.
2. Who are the customers?
If one client represents a large share of revenue, a buyer sees a business that could lose a large share of its value with one phone call. Concentration is rarely fixed in a quarter. It is fixed over years of deliberate selling.
3. Can the numbers be trusted?
Owner-managed businesses often run personal expenses through the company, or keep books that satisfy the tax authorities but not a diligence team. Every adjustment a buyer has to make on their own is an adjustment made in their favour.
4. Is the knowledge written down?
If the quoting logic, the set-up sheets, and the supplier terms live in a few people’s heads, the buyer is taking a risk on those people staying. Documented systems are dull. They are also worth money.
5. What does the equipment need?
A buyer will look at the age of your machines and estimate what they must spend in the first few years. Deferred capital is simply a cost that moves from your side of the table to theirs, and they will charge you for carrying it.
None of these can be fixed in the ninety days before a sale. All of them can be fixed in the years before.
This is the work we do. A buyer’s eyes are different from yours, and the price is set by theirs.