A financial sponsor wants to buy our business at a six times EBITDA multiple, but a strategic buyer is offering eight times with the catch that we must migrate to their ERP system within ninety days of close. How do we evaluate these two structures to ensure the strategic buyer's aggressive transition timeline does not blow up our post-close equity value?

Question

Tyler Smith · Accepted Answer

A higher multiple from a strategic buyer looks great on paper, but the operational integration risks can quickly erode that premium, especially if a portion of your payout is tied to rollover equity or transition milestones. A ninety-day migration to a strategic buyer's ERP is an incredibly aggressive timeline that can throw your team into chaos and tank your productivity. To evaluate these offers, you must run both through a realistic operational stress test. We use the Step by Step Exit (SxSE) framework to assess your team's capacity to handle an integration alongside daily operations. If your leadership team is already operating at maximum capacity, a forced system migration will cause your weekly Scorecard metrics to slip, putting any contingent payments at risk. If you lean toward the strategic offer, you must negotiate specific protections. First, write a transition services agreement that clearly defines who is responsible for the migration work. Do not let the buyer dump the technical heavy lifting onto your existing team without dedicated support. Second, structure the transaction so that any delays in the ERP migration do not impact your valuation or trigger indemnification claims, provided your team is cooperating in good faith. If the strategic buyer refuses to budge on these protections, the financial sponsor's clean six times multiple, with less integration friction, might actually yield more walkaway cash and lower stress for your team.