The most dangerous number in any business sale is not the asking price. It is the first number a buyer puts on the table — because that number, and the framing around it, will shape every negotiation that follows.
Most founders I speak with have no independent view of what their business is worth before they enter a sale process. They rely on their accountant's rough estimate, a competitor's reported sale price, or a multiple they read about in a trade publication. None of these are reliable. All of them leave money on the table.
Five questions every founder should ask before accepting any offer
1. What normalised EBITDA are they using as the base?
Most buyers will present a valuation as a multiple of EBITDA. What they will not tell you, unless you ask, is which version of EBITDA they are using. Normalised EBITDA adjusts for one-off expenses, owner's salary at market rate, personal expenses run through the business, and any non-recurring items. A business with reported EBITDA of $800K may have normalised EBITDA of $1.1M — and at a 4x multiple, the difference between those two bases is $1.2 million in your pocket.
2. What multiple are they applying, and why?
Multiples are not fixed. They are negotiated. They depend on industry, business quality, growth trajectory, customer concentration, and management depth. When a buyer quotes you a multiple, ask them to justify it with comparable transactions. If they cannot — or will not — that is a signal.
3. What assumptions underpin the earn-out?
Earn-outs are the most founder-unfriendly component of most deal structures. A buyer pays a portion of the price upfront and attaches the remainder to future performance targets — targets defined and measured by the buyer. If an offer contains an earn-out, understand: what triggers full payment, who controls the assumptions, and what happens if the buyer changes the business materially post-acquisition.
The earn-out trap: In a 2024 analysis of Australian SME transactions, fewer than 40% of earn-out components were ever fully paid. The most common reason was a change in buyer strategy that altered the business's ability to hit targets the seller had no control over.
4. What is included in the working capital peg?
Working capital adjustments are a common mechanism for reducing effective purchase price after headline terms are agreed. If you are not across this mechanism, a buyer can legitimately reduce your effective purchase price by hundreds of thousands of dollars in the final stages of a deal — when you are exhausted and committed to completing.
5. What is the real timeline to close, and who bears the risk of delay?
Every month a deal takes to close is a month the seller is managing the business for the benefit of the buyer — without the purchase price in their account. Understand the conditions required for close, who can delay those conditions, and what happens to your price if they do.
The one metric most buyers hope you never look at
Customer concentration. If your top three customers represent more than 40% of revenue, you have a business that is vulnerable to significant value impairment at the point of sale. Buyers price this risk — they simply do not always surface it explicitly. The time to address customer concentration is 2–3 years before you intend to sell, when you still have time to diversify.
Getting an independent view
Before you engage with any buyer, commission an independent business valuation from a qualified valuer who has no stake in the transaction. The cost is typically $3,000–$8,000. The protection it provides is worth multiples of that. It gives you a credible floor to negotiate from, removes the asymmetry of information that buyers rely on, and ensures that when someone puts a number on the table, you know whether it is fair — before you respond.
