The Due Diligence That Saved a Buyer $1.5M on an Acquisition
The Challenge
A SaaS founder was preparing to acquire an e-commerce brand. The seller demanded a 3.5M purchase price, citing a standard 4x multiple on a reported trailing-twelve-month EBITDA of 900k. The buyer needed rigorous financial due diligence before signing.
What We Did
We stress-tested the seller's financials and uncovered a critical hidden formula error: the seller had calculated their highest-cost recent months using expense data from the prior year. We rebuilt the financial model with correct logic — exposing the true EBITDA as 450k, exactly half of what was claimed.
The Result
- Revealed the target's true valuation was 50% lower than the asking price.
- Gave the buyer hard, defensible leverage in negotiations.
- Saved the buyer roughly 1.5M on the final purchase price.
Book a free call and we'll show you exactly where your numbers can work harder.
Book a Free CallWhy a Few Hours of Due Diligence Can Be Worth Millions
Acquisition prices are almost always a multiple of earnings, so every dollar of overstated EBITDA can inflate the purchase price by several. Seller-prepared models routinely contain optimistic assumptions, mis-referenced formulas, or add-backs that aren't truly one-time — and because the multiple amplifies them, a single error can move the fair price by seven figures. A proper quality-of-earnings review is how a buyer avoids paying for profit that isn't really there.
Signs this may be happening in your business:
- The valuation rests on the seller's own spreadsheet, unverified
- EBITDA depends on a handful of large or unusual adjustments
- Formulas that pull from the wrong period or the wrong line
- “One-time” add-backs that actually recur year after year
We rebuild the target's model from source data, normalize earnings, and stress-test every assumption — then hand you a defensible number to negotiate from. Diligence isn't a formality; it's leverage, and it routinely pays for itself many times over.