Most businesses are sold below their potential value. Not because of the market — but because value isn't built properly before the sale.
Private equity interest in Australian mid-market businesses has never been higher. If you are considering a sale — or have already received an approach — this is the starting point.
Most businesses are sold below their potential value.
Not because of the market — but because value isn’t built properly before the sale.
Where this fits
Demand → Pricing → Cash → EBITDA → Network → Visibility → Value
Private equity buyers are not generalists. By the time they approach a business, they have already built a model, formed a view on the sector, and identified the characteristics they want to acquire.
They are looking for recurring revenue, a defensible market position, an independent management team, and a clear path to growth. EBITDA margins that sit above the sector median command a premium. Owner-dependent businesses carry a discount — in multiple, in upfront cash, or in both.
The businesses that attract the strongest terms are not necessarily the largest. They are the ones where what the business does is visible, documented, and clearly connected to what drives performance.
The offer price will be expressed as a multiple of your EBITDA — your operating earnings, adjusted for items that are not representative of ongoing performance. That adjusted number is the one that gets multiplied. Every dollar of genuine, recurring improvement flows directly into value.
The multiple varies. A stable, growing business with diversified customers and clean financials might achieve seven to nine times in the current market. A business with customer concentration, owner dependency, or inconsistent margin might achieve four to six times. The preparation window — twelve to twenty-four months before a sale — is where you move from one range to the other.
Working capital is assessed at settlement. If debtors are elevated or inventory is heavy, this reduces net proceeds. Understanding your working capital position before any process starts is not optional — it is preparation.
Most founders misjudge valuation. Get clarity in minutes using a structured commercial model built from 25 years of P&L accountability across industrial and distribution businesses.
Start valuation →Valuation improvement happens in the twelve to twenty-four months before a sale — not during it. The changes that matter are operational, not cosmetic. They are the same things that make the business perform better every day, and they happen to also make it worth more.
Most businesses have pricing that has drifted. Rates set years ago, customers who have never been reviewed, margin that varies for reasons nobody has traced. A disciplined pricing review is one of the highest-return activities in sale preparation — and it does not require a price increase, only an understanding of where margin is and is not.
Cash trapped in debtors, inventory, and weak supplier terms quietly funds your customers — not your growth. Releasing it before a sale improves both the settlement position and the narrative around earnings quality.
A business that can only perform with the founder present is a different risk profile — and different deal structure — to one with a functional leadership layer. Demonstrating independence is the highest-return preparation activity for most founder-led businesses.
Built by an operator who has scaled and exited businesses across private equity, listed and private environments. View track record →
Built on real operating and private equity metrics — not generic multiples.
Used by founders and operators preparing for growth, capital or exit.
Start valuation →Do you know what actually drives your valuation?
The right time to sell is when the business is performing well, the team can run without you, and you have had time to close the gaps that would surface in due diligence. Selling from strength consistently produces better outcomes than selling under pressure or during a period of underperformance.
Timing matters in another sense too. An unsolicited approach that arrives before you are prepared puts the buyer in the stronger position. They have already formed a view on what your business is worth. You have not. That information asymmetry does not resolve itself — it has to be deliberately closed.
The businesses that achieve the strongest outcomes are the ones that engaged with a prepared plan — not the ones that reacted to an approach.
Responding to an approach before understanding your own normalised EBITDA, working capital position, and independent valuation range. The buyer's number then becomes the frame of reference for everything that follows.
An unsolicited first offer reflects what the buyer is prepared to pay without competition. It is almost always below what a structured, competitive process would achieve. One comparable alternative changes the dynamic entirely.
Issues found by the buyer during due diligence are used to reduce the price or change the structure. Issues disclosed upfront are treated differently. Running your own version of due diligence before the process starts is the only way to control how problems are framed.
A business that cannot operate without the founder commands a lower multiple, less upfront cash, and a longer earn-out requirement. Addressing this before going to market is one of the most impactful things you can do in the preparation window.
What do private equity firms look for in a business?
Private equity buyers look for recurring revenue, defensible market position, an independent management team, above-sector EBITDA margins, and a credible growth thesis. The combination determines both the multiple offered and the deal structure.
How is my business valued for a private equity sale?
Your business is valued using an EBITDA multiple — your adjusted operating earnings multiplied by a factor reflecting sector, quality, and risk. Net proceeds at settlement depend on that headline number adjusted for debt, working capital position, and any earn-out or deferred payment components.
How can I increase EBITDA before selling?
Focus on pricing discipline, cost-to-serve clarity, and working capital efficiency. Pricing is the highest-leverage lever — a 2% improvement in gross margin on a $20m business adds $400,000 to EBITDA. At 6x, that is $2.4 million in enterprise value.
When should I sell my business to private equity?
When the business is performing well, the team can operate without you, financial reporting is clean, and you have had time to close the gaps that would surface in due diligence. Selling from strength produces better outcomes than selling under pressure.
What are the most common mistakes when selling to PE?
Engaging without independent preparation, sharing financial information before knowing your own normalised EBITDA, accepting the first offer without competitive tension, and underestimating the impact of customer concentration and owner dependency on deal structure and price.
Use the EBITDA valuation tool to understand your current position, what buyers see, and where value is leaking before you enter any conversation.
Start valuation →Built by an operator who has scaled and exited businesses across private equity, listed and private environments. View track record →
Built on real operating and private equity metrics — not generic multiples.
Used by founders and operators preparing for growth, capital or exit.
Start valuation →This perspective is based on operating and scaling businesses across manufacturing, distribution and industrial sectors, including private equity-backed environments.