This case study is anonymised. The details have been modified to protect confidentiality. The pattern of issues. and the outcome. is real.

In 2023, a mid-sized manufacturing business in the DACH region was brought to market by its founder. The business had CHF 12 million in revenue, CHF 1.6 million in reported EBITDA, and had been profitable for twelve consecutive years. The founder had received an informal approach from a strategic acquirer and decided the time was right to explore a sale.

The final transaction closed at 4.0× adjusted EBITDA. CHF 6.4 million. Based on comparable transactions in the sector that year, a well-prepared business with the same financial profile should have achieved 6.5× to 7.0×. CHF 10.4 to 11.2 million. The difference was not the business. It was three fixable issues that were not fixed in time.

Issue 1: Customer concentration

The business's largest customer represented 61% of revenue. This was not a secret. it was disclosed in the Information Memorandum. But the founder had assumed that because the relationship had been stable for eleven years, buyers would see it as low risk.

Buyers did not see it that way. Every buyer who progressed to due diligence built in a structural protection: an earn-out tied to the retention of that customer for 24 months post-closing. The earn-out reduced price certainty and shifted risk onto the seller. The final deal included a CHF 1.8 million earn-out component that was never fully paid because the customer renegotiated its contract nine months after closing.

The fix: two years before going to market, the founder could have begun actively developing two or three smaller customers to dilute the concentration below 40%. It would have required work. It would have been worth CHF 3 to 4 million.

Issue 2: Owner as sole sales relationship

The founder was the primary. and in several cases the only. contact for the top five customers. There was no sales team. There was no account management structure. The CRM was the founder's phone and memory.

Buyers who conduct reference calls with customers before signing an SPA listen for one thing: what will change when the owner leaves? In this case, the answer from multiple customers was "we deal with [owner's name] directly, we're not sure what happens next." That uncertainty was priced into every offer.

The fix: hire and introduce a sales director twelve to eighteen months before going to market. Let them lead customer meetings with the founder present. By the time of the sale, the relationship should be shared. not transferred.

Issue 3: Unaudited financials

The business had never had its accounts audited. The accounts were prepared by the founder's accountant and were accurate. but they had never been subject to external verification. When buyers commissioned a Quality of Earnings review, the process took six weeks and identified CHF 180,000 of add-backs that could not be fully substantiated with documentation. The adjusted EBITDA was reduced accordingly, and the multiple was applied to the lower number.