A strategic competitor wants to buy us and is highlighting the cost synergies they will realize by firing our administrative team, but they refuse to include those savings in our EBITDA calculation. How do we force them to pay for a portion of these synergy savings?

Question

Tyler Smith · Accepted Answer

Strategic buyers routinely use their own synergy projections to justify a transaction internally while trying to buy you at a standalone financial multiple. To capture your share of this upside, you must use the IVS 105 concept of Investment Value, which measures the value of an asset to a specific owner with unique synergies.

First, run a detailed analysis of your own administrative and operational costs. Identify the redundant systems, overlapping software licenses, and headcount that the buyer can immediately eliminate. Translate these redundancies into a clear dollar figure. If your current administrative overhead is four hundred thousand dollars and the buyer can absorb those functions into their existing team, that is a direct, permanent cash flow improvement.

In negotiations, present this as a separate synergy adjustment. Argue that since they are acquiring a clean, EOS-run operation that requires minimal integration effort, they should pay a premium. If they refuse to adjust the baseline EBITDA, propose a structured split. Suggest a deal structure where fifty percent of the realized cost savings over the first year are paid out to you as a closing premium or a short-term earnout.

If they still resist, remind them of the principle of substitution. Another buyer would have to spend significant capital to build the infrastructure you are handing over. Do not let them double-dip by enjoying your operational efficiency while pocketing one hundred percent of the cost savings.