A strategic buyer is targeting our company and plans to eliminate our administrative and accounting departments to run on their shared services. How do we calculate these post-close cost synergies and build them into our historical EBITDA to justify a higher transaction multiple?

Question

Tyler Smith · Accepted Answer

A strategic buyer acquires your company to achieve synergies, but they will try to keep one hundred percent of that financial upside for themselves. If they plan to eliminate your back-office administrative, HR, and accounting departments post-close, those are real cost savings that immediately increase the profitability of your business under their ownership.

To capture your share of this value, you must calculate these savings and present them as a synergy adjustment to your historical EBITDA. Start by identifying every role on your current Accountability Chart that will be redundant under the buyer's corporate structure. Calculate the fully loaded cost of those salaries, benefits, and software licenses.

Once you have this number, add it back to your historical EBITDA as a pro forma synergy adjustment. When negotiating, argue that because your systemized operations make these cost savings immediate and low-risk, you deserve to be paid for a portion of that value today. Do not settle for a basic historical multiple that ignores these strategic gains. By presenting a highly organized transition plan, you prove that your administrative functions are easy to integrate, making your synergy calculations indisputable.