Half of our annual revenue comes from high-margin onboarding and custom implementation projects, while the rest comes from ongoing recurring service retainers. Potential buyers are trying to bifurcate our business and apply a low 3x multiple to our project revenue while offering 7x on the recurring portion. How do we restructure our offerings to defend a unified, high multiple across all our earnings?

Question

Tyler Smith · Accepted Answer

Buyers aggressively discount project revenue because they view it as transactional, non-guaranteed, and vulnerable to economic pullbacks. If half your income is derived from one-time implementations, buyers will split your EBITDA into two pools and apply a punishing blended multiple.

To protect a premium valuation, you must redesign how your solutions are packaged and delivered before entering diligence:

- Convert upfront project fees into recurring managed service contracts: rather than billing large installation or setup fees, bundle implementation into multi-year commitments with higher monthly recurring retainers.

- Standardize technical delivery: use your EOS® core process documentation and AI-assisted workflows to productize your onboarding process. When setup is systematized into repeatable, efficient operational stages, it looks like an institutional software onboarding process rather than custom consulting.

- Prove customer lifetime value conversion: pull historical data into your Scorecard to demonstrate that onboarding projects directly feed long-term recurring contracts at an 80 percent or higher rate. Showing that upfront implementations are merely the required gateway to high-margin recurring client relationships prevents the buyer from separating your earnings during financial diligence.