Not because they don’t know. Because telling you the truth doesn’t get them paid.
Brokers produce valuations. They are not offers. There is an enormous difference between the two — and the gap between them is where most deals die.
A broker valuation is a marketing document. Its purpose is to secure your instruction. An offer from a buyer is based on one thing: provable EBITDA, multiplied by a sector-appropriate multiple. For most SMEs in the UK, that multiple sits between 3x and 4x. Not 6x. Not 8x. 3x to 4x.
If your declared profit is £120,000 per year, your business is worth somewhere between £360,000 and £480,000 to a buyer who has done their homework. That may be very different from what a broker told you.
Most business owners have spent years minimising their declared profit. It is sensible tax planning. Until you decide to sell. At that point, every pound of profit you have hidden in expense claims, director remuneration, or family payroll arrangements becomes a pound off your sale price.
Buyers do not buy on potential. They buy on evidence. Clean accounts showing three years of consistent, growing profit are worth more than any amount of verbal reassurance about “what the business could do under the right ownership.”
And if you have other issues hidden in the books — CCJs, undisclosed creditors, director loans — they will be found. Due diligence is not a formality. It is a forensic examination of your business by people who do this for a living.
Selling a business takes time. Months. Sometimes years. And throughout that process, you are the person holding the business together while simultaneously trying to hand it to someone else.
Key staff will sense that something is changing. They may start looking elsewhere. Customers notice when the owner is distracted. Contracts that would have been renewed without question start going to tender. Revenue softens. Margins slip.
By the time you reach heads of terms — if you reach heads of terms — the business a buyer valued six months ago is not the same business they are about to buy. Renegotiation. Reduction. Deal fatigue. Collapse.
Due diligence is thorough. Bank statements, three to five years. Every significant payment, every recurring creditor, every director loan. PI insurance history. Any gaps in coverage. CCJs — yours, the company’s, your directors’. Pending litigation, supplier disputes, employee grievances. Regulatory standing, where relevant.
It is not about catching you out. It is about quantifying risk. But if something emerges that was not disclosed — that changes the entire dynamic. The buyer’s solicitors will advise them that the seller is not transparent. The deal dies, or the price falls sharply.
Here is a real example. I was days from completing on an acquisition when I found regular payments to a debt collection agency buried in the bank statements. A county court judgment had never been disclosed. The deal ended the same day. The seller is still running that business now, years later, still trying to find a buyer who won’t look too closely.
The pool of qualified buyers for UK businesses is smaller than it has been at any point in the last fifteen years. Higher interest rates have made acquisition finance more expensive. Lenders have tightened criteria. Private equity has moved upmarket, away from sub-£5m deals. Management buyout funding has dried up for smaller businesses.
The people who remain active as buyers are more selective, more cautious, and more demanding than they were five years ago. They know the market is in their favour. They can wait.
This is not a temporary blip. It is the new market. Your sale strategy needs to account for it.
Deferred consideration is a deal structure where the seller receives part of the sale price upfront and the remainder over time, usually tied to performance targets or simply paid in instalments. It is common in acquisitions. It is rarely mentioned by brokers.
The reason is structural: brokers calculate their fee as a percentage of the headline price paid at completion. Deferred payments complicate this. Some brokers exclude them from the fee calculation. Others charge on the headline number regardless of whether it is ever paid. Neither arrangement is aligned with your interests.
For a motivated seller in a tough market, deferred consideration can be the difference between a deal and no deal. A buyer who cannot raise the full price today may be able to commit to a structured payment over four years. That is not a bad deal. It is a deal that works.