Selling a Business
Selling a Business: Why Upfront Work Pays Off
Our in-depth and disciplined process of upfront work drives valuation and deal success.
You’ve built a great business, now we would love to help you with your acquisition in a way that suits you.
Selling a Business:: We Do the Heavy Lifting Before Going to Market
We approach every engagement like we’re preparing for a closing—before we even approach a buyer. That means we don’t just clean up your books or build a marketing summary—we construct a full investment-grade package that answers every question a buyer will ask. We cover every angle of the business:
- Operational infrastructure
- Staff and management roles
- Licensing and compliance
- Customer concentration and contract analysis
- Financials (historical, normalized, and trended)
- Backlog and pipeline visibility
- Differentiators and growth levers
This deep-dive is what enables us to run a competitive, controlled process—rather than reacting to one buyer at a time.
Why It Matters: Save Time, Preserve Leverage, Avoid Repeating the Pain
Every serious buyer—especially private equity—will run you through a highly detailed diligence process. And if that deal doesn’t close? You start all over again with the next buyer. But when you work with us, we do this analysis once and do it thoroughly, so you don’t have to relive the process over and over again. We package everything in a way that:
- Anticipates the entire diligence journey
- Answers buyer’s questions up front
- Speaks their buying language
- Allows you to engage multiple buyers in parallel, creating competition and momentum
Everything in One Place: Our Secure, Centralized Data Room
To support this process, we host all materials in a professionally managed, secure data room.
- All documentation is structured, categorized, and clearly labeled.
- Buyers can access everything from financials to contracts, licenses, org charts, fleet lists, and more
We control who sees what, and when - We can track activity in real time—including who is logging in, how often, what they’re viewing, and how deeply they’re engaging
- This ensures a seamless buyer experience and gives us critical intelligence about who’s serious and where to focus.
What Buyers Want—and What We Deliver
We dig deep into the following areas to position your business effectively:
- Financial Performance
• Adjusted EBITDA with transparent add-backs
• Revenue segmentation (service, project, maintenance)
• Margin profiles by job type
• Backlog and conversion timelines
• Cash flow seasonality and predictability - Customer and Contract Base
• Customer tenure and concentration
• Recurring service agreements
• Institutional clients (schools, GSA, municipalities)
• Future pipeline - Team and Organizational Structure
• Org chart and roles
• Key staff and licensing
• Owner’s involvement and exit strategy - Licensing, Equipment, and Assets
• Real estate, fleet, and systems
• Inventory controls and field technology - Market Position and Differentiators
• Regional reputation
• Unique capabilities (design-build, federal work, etc.)
• Track record and win rates - Growth Opportunities
• Geographic or vertical expansion
• Upsell strategies
• Staffing capacity improvements
• Automation opportunities
The CIM + Data Room: Your Competitive Advantage
All of our diligence and positioning culminates in a Confidential Information Memorandum (CIM)—a customized, buyer-facing document that:
- Tells your full story in investor language
- Builds trust with data-backed credibility
- Answers all buyers questions
- Keeps momentum through due diligence
Combined with the secure data room, this creates a two-part platform:
- A front-end narrative that positions your company as a premium opportunity
- A back-end diligence engine that answers every question with confidence and clarity
How Private Equity Buyers Evaluate a Business
Private equity (PE) buyers approach deals with disciplined financial metrics and structured return targets. A few key tools and thresholds they commonly use include:
1. Coverage Ratios
PE firms often use coverage ratios to evaluate whether the business can comfortably support the debt they intend to put on it. Common examples:
- Debt Service Coverage Ratio (DSCR): EBITDA ÷ Annual Debt Service — buyers often look for 1.5x or better
- Interest Coverage Ratio: EBITDA ÷ Interest Expense — typically should be above 2x for a leveraged transaction
These ratios help PE firms assess downside protection and ensure financing won’t choke off operational flexibility.
2. EBITDA Multiples as Buying Guides
EBITDA remains the core metric most PE firms use to value and compare acquisition targets. Typical private equity guides and ranges include:
- Main Street businesses: 2.0x–4.x EBITDA
- Lower middle market (>$2M EBITDA): 3.0x–6.0x
- Businesses with scale, contracts, or recurring revenue: 5.0x–10.0x+
Premiums are paid for growth potential, industry position, strong management teams, and repeatable, ’sticky’ revenue.
3. Buy-and-Build Considerations
Many firms are focused on “buy-and-build” strategies, looking to add smaller companies into existing platforms. In these cases, they evaluate:
- Geographic fit
- Cross-sell opportunities
- Back-office and operational synergies
- Ability to fold your business into a larger structure while retaining cash flow
Understanding these drivers allows us to position your business properly, defend its value, and align it with the most relevant buyer type.
Flexible Deal Structures to Optimize Tax and Strategic Outcomes
Another advantage of our approach is the ability to design customized deal structures that align with your financial goals, risk tolerance, and tax strategy. Buyers today can structure acquisitions in a number of ways:
- Asset sales (common but potentially more taxable for the seller)
- Stock sales (often preferred for tax purposes, particularly when selling a C-Corp)
- Installment sales or earn-outs to defer income and tie payments to performance
- Equity rollovers to allow continued upside post-close
- Partial recapitalizations if you’re looking to take some chips off the table but stay involved
We work directly with your tax advisors, attorneys, and wealth planners to help model the after-tax outcomes of various structures before you accept an offer. This is a key part of why preparing thoroughly, packaging cleanly, and engaging multiple buyers simultaneously gives you not just a higher number—but a better deal overall.
Why a Quality of Earnings (QoE) Report is Essential
Buyers don’t buy off tax returns—they buy off normalized, verified, defensible EBITDA. A QoE is:
- A language buyers understand.
It breaks down revenue trends, customer concentration, cash conversion, and true earnings with clarity. - A credibility builder.
It reduces deal friction and signals professionalism. It helps your deal stay on track and avoids surprises. - A valuation protector.
If buyers uncover inconsistencies after an LOI, they re-trade or walk. A QoE keeps you in control.
Why It’s Expensive — and Why It’s Worth It
- It’s not an audit—it’s a buyer-level forensic analysis
- It’s performed by specialists with deal expertise
- It prevents last-minute value erosion
Typically, we include QoE prep in our engagement with an in-house team, reflected in our $25,000 flat fee. It’s one of the smartest investments you can make when preparing for market.
Our Fee Structure
Our fee model is structured to reflect the depth of our upfront work and our success-driven philosophy:
1. $25,000 Upfront Fee
This covers:
- Full financial review and normalization
- Quality of Earnings (QoE) preparation. (Ask your CPA how much they might charge you this this QoE alone)
- Business valuation support
- Market positioning
- CIM creation
- Secure data room setup and management
The upfront work is critical—it gives us control of the narrative and ensures your business is presented in a way that maximizes value, minimizes surprises, and builds buyer confidence.
2. Lehman Success Fee (Paid at Closing)
This is a performance-based fee, paid only when the deal closes. It typically follows a tiered model based on the widely used Lehman formula:
- 10% of the first $1 million
- 8% of the second $1 million
- 6% of the third $1 million
- 4% of the fourth to $10 million
- 2% of the remainder
This approach ensures our incentives are fully aligned with yours: we only win when you do, and we’re highly motivated to maximize total enterprise value, not just close quickly
Bottom Line
Real buyers will do this work—this is the buying process. There are no shortcuts. But they do it on their terms, at their pace, and with their advisors in their favor. And if the deal doesn’t happen for whatever reason, you’ll be stuck doing it all over again with the next buyer. When a buyer is faced with unknows they build that risk into a lesser offer, or they simply move on to their next acquisition target.
If you do it once with Acres:
- You stay in control
- You save months of time, money and frustration
- You unlock real buyer competition
- Ultimately this gets you to the finish line.
This is the work that moves the needle. And it’s exactly what we do best.
The Selling Process involves navigating complex considerations. ACRES brings expertise and a personalized approach to help with a successful transition.
Success begins here.
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