Our business grew forty percent over the last two quarters due to a major service launch, but the buyer insists on applying their 6x multiple to historical Trailing Twelve Month EBITDA rather than our forward run-rate. How do we negotiate a weighted or run-rate EBITDA base?

Question

Tyler Smith · Accepted Answer

When a business accelerates rapidly, standard Trailing Twelve Month (TTM) EBITDA heavily penalizes the seller by weighting historic, smaller quarters equally with your current operational reality. A buyer will naturally push for TTM because it gives them unearned pricing leverage. Your objective is to shift the valuation base to an annualized last six months (L6M), last three months (L3M), or a forward Next Twelve Months (NTM) model.

To win this argument, you must prove through your data that your recent growth is an established operational step-change, not a temporary spike. Bring three forms of evidence:

- Scorecard predictability. Show weekly Scorecard trends over the last 26 weeks demonstrating sustained volume, capacity utilization, customer acquisition cost stability, and gross margins across the new service line.
- Contractual backlog and retention. Present signed long-term service agreements, recurring retainer commitments, and net revenue retention figures proving the newly acquired revenue is sticky and committed, not transactional project work.
- Unit economics. Demonstrate that delivery capacity did not break down and that your hiring pipeline or tech automations will sustain this EBITDA margin without requiring massive immediate capital expenditure.

If the buyer still resists an annualized run-rate multiple, use structural tools to capture the value instead of accepting their historical discount. Propose a weighted average formula (such as 50 percent weighting on the last six months annualized and 50 percent on the full TTM) or establish a short-term, 120-day post-close performance true-up. A true-up pays out a cash adjustment if the company hits the forward run-rate target, allowing you to capture the enterprise value of your growth without forcing the buyer to take all the forward risk upfront.