A strategic buyer wants to acquire us and is projecting massive cost savings by consolidating our administrative departments, but they are offering a standard standalone multiple. How do we capture our share of these synergies in the transaction structure?

Question

Tyler Smith · Accepted Answer

Strategic buyers buy businesses to gain synergies, but they will try to pay you based on your standalone value and keep all the upside for themselves. To capture your share of the synergy value, you must quantify and structure the deal to share the benefits. Do not let them keep the math a secret. Use your Accountability Chart to identify exactly which of your administrative seats will be eliminated post-close. Calculate the total cost savings from consolidating software, rent, and overhead. Once you have this number, present it as part of your adjusted EBITDA. Demand a multiple that reflects a portion of these post-close savings, or structure a synergy-based earnout. For example, if consolidating operations saves one million dollars annually, negotiate an earnout that pays you a percentage of those savings as they are realized over the first eighteen months. This aligns both parties and ensures you are compensated for building an organization that was highly compatible for acquisition. Never let a buyer use your operational efficiency to line their own pockets for free.