6 Numbers a Buyer Will Recalculate When You Sell Your Business
Sam's List Editorial | 2026-08-01
6 Numbers a Buyer Will Recalculate When You Sell Your Business Here is the thing nobody tells you about selling a business: the buyer is not buying your numbers. They are buying their own version of your numbers, rebuilt from your data by someone whose job is to find reasons the figure should be lower. That is what a quality of earnings process is. Understanding what buyers look at when you sell your business, and which of your numbers will not survive contact, is the difference between negotiating from your model and reacting to theirs. These are the six they always rebuild. 1. Adjusted EBITDA, and Which Add-Backs Survive Every seller presents adjusted EBITDA. Every buyer re-adjusts it. The gap between the two versions is usually the largest single item in the negotiation. Add-backs that generally hold up are one-time, documentable, and clearly not part of the ongoing business: a legal settlement, a failed product launch with its own cost coding, a one-off severance. Add-backs that generally do not hold up are recurring costs described as unusual, personal expenses run through the business, and anything where the documentation is a verbal explanation. The uncomfortable part is that personal expenses in the books cut both ways. Yes, adding them back raises EBITDA. It also tells the buyer your records mix personal and business spending, which makes them discount everything else you present. A clean set of books with fewer add-backs often produces a better outcome than a messy set with more. 2. Net Working Capital and the Peg This is the number that most often moves actual cash at closing, and the one sellers understand least. Most deals set a working capital peg, a normal level of receivables plus inventory minus payables that the business is expected to deliver at close. Deliver less and the purchase price adjusts down. Deliver more and it may adjust up, though the mechanics are frequently asymmetric. The peg is usually built from a trailing twelve-month average, which means the buyer is calculating it from months you have already lived. If your collections have been slow all year, that becomes the normal you are held to. If you accelerate collections right before close to build cash, you deliver below-peg working capital and give back the same money at settlement. Seasonality matters enormously here and is worth modeling with your adviser well before a letter of intent. 3. Revenue Quality: Recurring, Concentrated, and Cut Off Correctly Buyers do not value all revenue the same way, so they take your vetted line apart. They separate recurring from one-time,...
