Selling Your Business? Buyers Can Cut Your Price After the LOI
In this advisory segment, the speaker emphasizes that the timing of quality‑of‑earnings (QoE) work is critical for sellers. Discovering a QoE issue before a company is marketed allows the seller to fix or document it, whereas finding the same issue after signing a letter of intent (LOI) gives buyers a reason to lower the purchase price while the seller is already under exclusivity. The speaker cites a QoE provider who notes many recent buy‑side deals where sellers did no prep work, causing value to shift toward buyers. The provider’s rule of thumb is that founder‑owned companies valued above roughly $10 million should obtain a QoE report, even at a cost of about $60 k; smaller deals often resist spending $35‑$75 k until it’s too late. A concrete illustration shows that at a 6× multiple, $150 k of rejected add‑backs can shave $900 k off the final price. The overall message is that early QoE preparation protects valuation and prevents costly price cuts after an LOI.
