When selling to a strategic buyer, how do we negotiate the removal of our personal executive salaries and non-operational benefits from the EBITDA calculation when they already have a complete back-office team?

Question

Tyler Smith · Accepted Answer

When selling to a strategic buyer, their QofE firm will look closely at your corporate overhead, but you must proactively negotiate the normalization of your personal executive compensation and non-operational benefits. A strategic buyer already has an established HR, accounting, and legal department, meaning they will immediately eliminate your back-office expenses post-closing. To ensure you capture this value in your transaction price, you must present a detailed breakout of these synergistic cost savings. Go through your Accountability Chart and identify every seat that will be consolidated into the buyer's existing corporate structure. Show how the elimination of these redundant roles directly increases your pro-forma EBITDA. You must document these adjustments clearly, separating your actual operational delivery costs from your personal, discretionary owner expenses. In your discussions, emphasize that these are not hypothetical savings; they are immediate cash-flow improvements the buyer will realize on day one. By proving that your business can run seamlessly under their corporate umbrella with significantly lower overhead, you can force the buyer to apply your multiple to an adjusted, pro-forma EBITDA figure that reflects these massive operational synergies.