How to sell your business for maximum value

Executive overview

Most entrepreneurs leave enormous money on the table by selling to financial buyers at EBITDA multiples, when strategic buyers would pay far more to integrate the business into their own operations. The gap between what a seller expects and what a strategic buyer would pay can be orders of magnitude apart — Rob Follas sold his own business for 27x EBITDA, then learned the buyer would have paid 100x.

STS Capital specialises in identifying global strategic buyers and positioning mid-market businesses (enterprise value $50M–$5B) to capture that hidden value.

The core insight: price is not a multiple of your earnings — it is a function of what your business is worth inside a strategic buyer's operation.

What strategic buyers actually pay for

• A strategic buyer is one who can make significantly more money owning your business than you currently do.
• The acquisition price is determined by how much profit the buyer can generate with your business integrated into theirs — not by your EBITDA.
• Private equity conditions entrepreneurs to think in EBITDA multiples; this is in PE's interest, not the seller's.
• A single unique asset (intellectual property, inland port, proprietary system) can make one buyer willing to pay 20x what another buyer offers.
• The seller's job is to find and articulate those "Rembrandts in the attic" — hidden value the seller can't easily see in their own business.

How STS positions businesses for strategic buyers

• Works exclusively on the sell side; never represents buyers.
• Identifies global strategic buyers who would benefit most from integrating the business.
• Helps the buyer's internal team socialise and justify the acquisition — reducing the buyer's perceived career risk.
• Uses a hockey-stick fee structure: baseline commission at the agreed private-equity floor, rising steeply as the final price exceeds that baseline, fully aligning advisor incentives with seller outcomes.
• Requires substance in size: deals below ~$50M enterprise value rarely move the needle for strategic buyers unless SaaS or IP-driven.

What sellers do wrong

• Taking their foot off the operational pedal once the process starts — the business must keep growing through the sale.
• Getting over-involved in the deal process instead of delegating it to advisors.
• Defaulting to large iBanks (Goldman, JPMorgan, Bank of America) whose interests are not aligned with entrepreneurial sellers.
• Letting a private equity co-investor drive the process — PE optimises for its own return, not the founder's.
• Optimising for the lowest advisor fee percentage rather than net proceeds.

The 11th-hour problem

• Sellers must define required vs preferred outcomes before negotiations begin, in a calm state of mind.
• If the final offer exceeds the required outcome, the strong guidance is to accept — deals can collapse completely.
• Case study: a heating and air conditioning group rejected a $256M offer (against a $50M ask and $100M stretch goal) after a private jet ride made them feel the buyer could pay $300M. The buyer walked. Four years later they achieved a $250M offer.
• A Vancouver founder turned down $117M and was out of business six months later.
• Once a price is fully socialised internally at the buyer, attempting to re-trade is treated as bad faith and kills deals.