A strategic buyer is offering a higher multiple than financial sponsors, but we suspect they are trying to capture all the synergy savings for themselves. How do we model and present our joint cost and revenue synergies to force them to pay us for that strategic value at the closing table?

Question

Tyler Smith · Accepted Answer

Strategic buyers pay premium multiples because they can combine operations, eliminate duplicate costs, and cross-sell to expanded customer bases. However, if you simply let them calculate these synergies in isolation, they will price your business based on your historical standalone EBITDA and pocket all the combined savings as pure profit.

To capture your share of this strategic premium, you must build your own synergy model and present it proactively. Divide the opportunities into two clear categories: cost synergies and revenue synergies. Cost synergies, such as consolidating software platforms, overlapping office footprints, or administrative staff, are highly tangible and should be presented with high confidence.

Revenue synergies, such as cross-selling your proprietary AI tools to their larger customer list, should be modeled with clear phase-in periods. Once you have calculated the total annual value of these combined savings, negotiate to split the value. A common industry standard is to ask the buyer to pay you for fifty percent of the capitalized value of the near-term cost synergies as an upward adjustment to your enterprise value.

Use your V/TO® and Accountability Chart to prove how easily your operations can integrate with theirs. If your leadership team is already running a highly systematic, EOS®-driven operation, the integration risk for the strategic buyer is dramatically reduced. Presenting this operational readiness in your management presentations proves you have built an asset that is ready to scale immediately, justifying a premium multiple.