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Episode Summary
You’ve got an offer sitting in your inbox from a buyer you’ve never met, and you’re trying to decide if it’s the offer or just an offer. Adam Webb runs deals at Quazar, a Minneapolis M&A firm that’s been doing this for 35 years, and his answer is direct: the odds that the one buyer who happened to call you is also the best fit and the best valuation are near zero. We got into why the delta between low and high offers in the lower middle market can hit 100%, why your direct competitor is rarely your best buyer, and how the right intermediary pays for their fee just by signaling to the room that you have options. We also dug into how most family-owned businesses don’t run a budget, a forecast, or a Three-Statement Model, and what that gap costs them when they hit the table. Real story near the end about a home services deal where $300K more of EBITDA flipped a 3.5x multiple business into a 7x multiple business, and the owner had no idea.
Top 10 Takeaways
- Hire the wrong intermediary and a sale-ready business still produces a suboptimal outcome.
- The delta between the low and high offer in your market can hit 100%. Process closes that gap.
- Your direct competitor is rarely your best buyer. Industry-adjacent operators who want your capability are.
- An unsolicited offer is almost never your best offer. The odds the right buyer randomly called you are near zero.
- Hiring an investment bank pays for itself just by signaling to the buyer that you have other options.
- The value of your business comes from two things: the cash flow it generates, and the quality of that cash flow.
- The qualitative story (stability, concentration, future) lives inside the multiple. Buyers want story, not finance theory.
- Most family-owned businesses don’t run budgets, forecasts, or a Three-Statement Model. That’s the gap.
- Time the sale where macro, business performance, and personal goals overlap. Plus or minus a year is realistic.
- Private equity platforms have hard size thresholds. Crossing the line by $300K of EBITDA can double your multiple.
Sound Bites
“You can do everything right. They can get their business incredibly sale ready. But if you hire the wrong intermediary, the wrong investment bank, the wrong business broker, you will get a suboptimal outcome.” (@00:08:49) — Adam Webb
“If you own a business and you get an offer out of the blue, what are the odds that that one buyer who happened to call you is the best fit and is gonna offer the best valuation? I would argue the odds are near zero.” (@00:29:13) — Adam Webb
“The value of a business is essentially driven by two things. The cash flow it generates and the quality of the cash flow.” (@00:37:34) — Adam Webb
“What you thought was a three and a half multiple business could be a seven multiple business. And all you gotta do is increase EBITDA by $300,000.” (@01:14:00) — Adam Webb
About This Episode
Adam Webb is a partner at Quazar, a Minneapolis-based M&A firm that’s been serving the lower middle market for 35 years. Quazar runs five to eight third-party sale processes a year and was recognized by Axial as one of the top 100 M&A firms in the world. Adam brings a data-driven, active-marketing approach to selling businesses, in contrast to the listing-and-praying approach common in the broker world. He’s also a serious poker player, which informs how he thinks about decisions under uncertainty. This episode sits inside Ryan’s transaction-value work and is a useful complement to the broader iBD valuation conversations.
Resources Mentioned
- Quazar — Adam’s M&A firm. Lower middle market third-party sales. — quazarinc.com
- Axial — Recognized Quazar as a top 100 M&A firm.
- Wall Street Journal — Recent article on home services M&A activity referenced in the conversation.
Connections
Phase + Module:
- Module 2 — Expand Knowledge — Knowing what your business is worth and to whom
- Module 1 — Ownership Goals — The owner-side decisions that drive timing and structure
Milestones:
- Milestone 6 — Transaction Value — What a buyer will actually pay, including structure
- Milestone 5 — Market Value — The market read that informs the buyer-list strategy
- Milestone 3 — Net Worth & Valuation Targets — The number that determines whether now is the right time
Concepts referenced:
- The Multiple & WACC — Where the qualitative story shows up in valuation
- Three Lenses of Value — Owner’s value, market value, transaction value
- Value Gap — The gap between the number in the owner’s head and the actual market
- Normalized EBITDA — The denominator behind every multiple conversation
- Three-Statement Model — The discipline most family-owned businesses don’t have when they hit the table