Selling in Three Years? The Value Gap Work Starts Now

Ahmad Majid  |  Partner  |  AccountNext LLP, Calgary | Case study tease

The best time to value your business is when you are not selling it. By the time a buyer is at the table, every weakness is a price reduction. Three years out, every weakness is a project, and the difference between those two framings routinely shows up as a material discount to price.

What buyers actually discount 

The discounts cluster around four findings. Owner dependence: if revenue, key relationships, and decisions run through you, the buyer is purchasing a business that partially leaves in your car. Customer concentration: a top customer above 20 to 25 percent of revenue moves from a diligence question to a price term. Financial information quality: statements a buyer cannot rely on stretch diligence, shrink certainty, and invite price chips. And earnings quality: profit propped up by under-market owner compensation or deferred spending gets normalized against you. None of these surprises an experienced advisor, and none of them is fixable in a deal timeline.

Why three years is the number

A management layer takes a year to hire and a second year to demonstrably run things. Customer diversification is a sales strategy, not a quarter's work. Clean, consistent statements need two to three year-ends to become a track record a buyer will price. Start at the LOI and all of this becomes vendor promises; start now and it becomes evidence. 

The starting point is a number

A saleability assessment answers two questions: what is the realistic range today, and which specific factors are holding it below the range you want. That turns 'grow the business' into a ranked project list with dollar values attached, and it changes how you run the next three years even if you never sell, because a business built to be sellable is simply a better business.

We recently walked an owner through exactly this exercise; the gap between the today number and the fixable number was seven figures, and the fix list had five items on it. If your horizon is inside five years, book the value gap assessment now, while every finding is still a project instead of a discount.

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Disclaimer: This article is intended for general informational purposes only. The appropriate accounting, tax, legal, and compliance approach depends on the specific facts. Consult qualified professional advisors before making decisions.