What Buyers Actually Pay For

Every owner I meet wants to talk about multiples. It is the wrong first conversation. A multiple is the market's summary of how confident a buyer is that your cash flow will still be there the morning after closing. Confidence is what you sell. The multiple is only the receipt.

Confidence has four sources

• Earnings a third party can verify without a leap of faith.
• Revenue that does not depend on the owner's phone.
• A management layer that survives your absence for ninety days.
• Clean records — corporate, tax, and customer contracts alike.

None of that is exotic. All of it takes eighteen to thirty-six months to build, which is precisely why it has to begin long before you call an advisor.

You are not selling a business. You are selling the buyer's confidence in next year's cash flow.

In the lower middle market, the gap between a 3.5x outcome and a 6x outcome is rarely the industry. It is preparation. The owners who prepare are the ones who get to choose their buyer instead of accepting the one who shows up.