The Number in Your Head Was Set by Someone Else's Business
Introduction
Graham had been carrying the figure for four years. Six million. It was not written down anywhere, not in a plan or a valuation, but it was in every conversation he had about the future - the house on the Exe estuary, the year in Portugal, the money his daughter would get for her deposit.
He ran a compliance and facilities services company in Devon. Turnover of £4.6m, EBITDA of £750,000. EBITDA is earnings before interest, tax, depreciation and amortisation, the rough proxy most buyers use for operating profit. Six million was eight times that number, and eight had come from a dinner in 2023, where a man he barely knew described selling his business for eight times earnings.
In August 2026, Dealsuite published something that should concern anyone carrying a figure like Graham's. Across 102 M&A advisory firms working the UK and Ireland mid-market, advisers reported that in 49% of sale processes the seller's valuation expectation was too high. The average gap was 23%. In 24% of those cases, the gap killed the deal.
That is not a story about greedy sellers. It is a story about where numbers come from, and how rarely anyone checks.
1) Where Eight Came From
Two figures in the current market are close to eight, and neither of them describes Graham's business.
Software development sits at an average EBITDA multiple of 8.0, the highest-valued sector in the UK and Ireland mid-market. And businesses producing £10m of EBITDA trade at an average of 8.2. Both numbers are real and current. Both belong to companies unlike Graham's.
The average across the whole mid-market is 5.4. Business services, Graham's actual sector, is 6.3, and it posted the largest gain of any sector this period. But scale pulls hard in the other direction. At £200,000 of EBITDA, the average multiple is 3.6. The 4.6-point spread between that and the £10m figure is what advisers call the small firm premium, meaning the discount a buyer applies to compensate for the higher risk of a smaller business.
Graham sat between those poles, closer to the bottom than he had ever allowed himself to think. He had built his expectation from the best number in the market and applied it to a business that was neither in that sector nor at that scale.
Founder Insight: "The figure becomes a fact." A number you have repeated to your spouse for four years stops feeling like an estimate. It becomes the thing you are owed for thirty years of early mornings. That is precisely why it is so hard to test, and why the test is worth more the longer you have held the number in your head.
Action step: Write down your figure, then write down where it came from. If the answer is a conversation, a headline or a rule of thumb, you have an assumption rather than a valuation.
2) The Gap Has a Size Now
Advisers have known for years that unrealistic seller expectations top the list of reasons deals collapse. What changed in August is that the scale of it has been measured: how often it happens, how wide it runs, and how often it ends the process.
Twenty-three per cent is a survivable gap. It is not a chasm. On Graham's business it is the difference between a number he would sign and a number he would refuse, but it is close enough that a serious buyer will keep talking, keep asking for information, keep his lawyers busy - and then stop.
The quarter of cases that die are the ones where the seller could not move. The rest close, usually somewhere the seller had not planned to be.
3) What the Buyer Is Actually Pricing
Graham's number rested on his EBITDA. The buyer's number rested on normalised EBITDA, which is his profit adjusted for one-off and owner-specific costs so the buyer sees what the business really earns under new ownership.
Some of those adjustments went his way. His own salary was above market for the role, and the car and the golf membership came out too. Some went against him. Two of the three years of margin improvement he had been proud of came from a supplier arrangement that ended in 2025. A property lease was well below market and had four years left.
Then the buyer priced the risk sitting behind the earnings. His largest client was 31% of revenue and had been with him since 2009 on a rolling contract with a three-month notice period. His operations manager held every supplier relationship and had no contract of employment worth the name. Nothing there was fatal. All of it moved the multiple.
🚩 Diligence Flag: "The add-backs you cannot evidence." Sellers routinely present a list of adjustments that lifts EBITDA by ten or fifteen per cent, then cannot support half of it. The buyer removes the unsupported items in week six, after exclusivity, when the seller has no competing offer to walk to. Build your add-back schedule now, with contemporaneous evidence for every line, and have your accountant test it before a buyer does.
4) Testing the Number Before You Commit
Graham's test took an afternoon and a phone call, eighteen months before he intended to go anywhere near a buyer.
He started with normalised earnings rather than reported profit, and was honest about the supplier arrangement. He applied a range rather than a point, using current published sector data for a business at his scale rather than the best figure he had ever heard. He asked what a buyer would do with the client concentration. And he asked his accountant one question: if you were on the other side of this, what would you take off?
The range came back materially below six million. He did not enjoy the afternoon. But he had eighteen months, which is the entire point of running the test early. A founder who runs it after signing heads of terms has the same information and none of the room.
Action step: Get an evidenced range, with the reasoning written down, at least twelve months before you plan to market. A number you can defend is worth more in a negotiation than a number you merely want.
5) When the Gap Is Real
There are three honest routes, and only three.
Reset the expectation. Sometimes the market number is the number, and the work is on the founder rather than the business. This is the route nobody sells, and it is often the right one.
Close the gap. Graham's customer concentration, his undocumented operations manager and his ended supplier arrangement were all fixable given time. Scale itself is the other lever: growth in earnings at his end of the market moves the price twice, once through the earnings themselves and once through the higher multiple that larger businesses attract.
Structure around it. Dealsuite reports advisers increasingly using deferred payments and other risk-sharing structures between buyer and seller to bridge exactly this kind of divide. That can work. It also means part of your price now depends on what happens after you have handed over the keys, which is a different decision and deserves its own hard look.
6) What It Costs to Find Out Late
Buyer competition is the thing a mispriced expectation quietly spends. The average company for sale now attracts 8.5 serious buyers, up from 7.9 a year ago, and in some sectors far more - IT services averages 12.3 interested parties.
That competition is your protection. It disappears the moment you grant exclusivity to a buyer whose offer was built on your number rather than the market's. Five months later, when the diligence findings land and the price moves, you have no one else to call and a lot of sunk fees.
Graham eventually sold, at a figure he would have refused when he first named his price and accepted eighteen months later, having spent that time making the business worth more.
Test the Number While It Is Still Yours
Half of UK and Ireland sale processes start from a seller's figure the market will not pay. The actual price gap average comes in a little under a quarter, which makes it both survivable and easy to ignore (until it becomes truly expensive).
You control this one entirely, and you control it best before anyone is at the table. Find out where your figure came from. Get it tested against evidence rather than anecdote. Then decide what to do with what you learn, while you still have the time to do something.
If you would like an independent read on where your business stands and what it would realistically fetch today, that is what our Exit Readiness Assessment is for. No process, no mandate, and no reason for us to tell you a number you would prefer to hear.
About Exit Strategy & Solutions
Exit Strategy & Solutions is a specialist advisory firm helping UK SME owners build optionality, maximise value, and reduce risk through strategic exit planning and execution.
Our approach combines deep market intelligence, strategic positioning expertise, and an unwavering focus on protecting your interests at every stage.
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Disclaimer
This article is provided for informational purposes only and does not constitute legal, tax, or regulated investment advice. Examples cited are based on composite scenarios for illustrative purposes. Exit Strategy & Solutions is not responsible for decisions made based on information in this article.
