If you look over the shoulder in this video there is a lifeguard tower at Haleiwa Alii Beach Park on the North Shore of Oahu. The lifeguards on the North Shore are some of the best on the planet — and there is a reason for it. They grew up on the beach. They scuba dive, they snorkel, they surf out here. They know where the reefs are. They have watched the water for hours and decades on end. They know where the danger zones are.
When the beach opens at 8am those lifeguards come out at 7am or 7:30am and prep the beach. They look at the conditions, the waves, how much debris ended up on the beach overnight, whether there are sharks in the water. The day this video was filmed there was a sign right there: do not go in the water. A big storm had shaken the North Shore and put debris and garbage into the water. That sign is the lifeguard doing their job — giving you fair warning so you do not get hurt.
That is exactly what a great M&A advisor does. Their job is to look at your deal, your business, your preparation, your timeline — and tell you what you need to hear, not what you want to hear. The lifeguard does not tell you the water looks great when the debris is in it. A great M&A advisor does not tell you your business is ready to go to market when it is not. Learn the full framework in Exit Ratio 360™ and at Exit Ratio 360™ — the 360-point evaluation system.
Do I need an M&A advisor to sell my business?
Yes — and here is the honest reason why. Your management team tells you what you want to hear because they want to keep their job. Your business partners have skin in the game and their own perspective. The people closest to your business have the least incentive to tell you the hard truth about what needs to change before you go to market. A great M&A advisor is the one person in the room whose job is to tell you exactly what needs to be in place — quality of earnings, clean financials, decision bands, standard operating procedures, org charts, recurring revenue, client concentration below 20 percent — and give you a realistic timeline to get there. That is the lifeguard standing on the beach with a bullhorn telling you the water is not safe yet.
What is the difference between an A plus deal and a C deal when selling a business?
If your industry is trading at seven to ten times EBITDA — which is the typical mid-market range — the deal grade you earn determines where in that range you land and whether you can break above it. An A plus deal — built with a Titan Thesis, full preparation, five to four to three to two years of documented operational excellence — can get you eleven, twelve, thirteen, fourteen, fifteen times EBITDA. That is the maximum multiple. An A deal gets you a ten. A B deal gets you a seven. A C deal gets you a six. A D deal — standing for do not do it — gets you half of whatever the market is trading at. The difference between a maximum multiple exit and a C deal on a $5 million EBITDA business is significant. That gap is the M&A advisor’s job to close.
What does the lifeguard analogy mean for M&A advisors?
The lifeguards at Haleiwa Alii Beach Park on the North Shore of Oahu are some of the best in the world because they grew up in the water. They know the reefs, the currents, the danger zones — not from a manual but from decades of direct experience. They come out before the beach opens and assess the conditions. When the conditions are bad they put up a warning sign. When conditions are right they wave you in. That is exactly what a great M&A advisor does. They know the deal landscape, the buyer types, the market conditions, the preparation requirements. They assess where your business stands before you ever engage a buyer. And they tell you — sometimes hard — what needs to change before you are ready to go to market.
What does a great M&A advisor tell you before you go to market?
A great M&A advisor looks at your business and tells you specifically what is missing. Clean financials closed on a consistent monthly date for the last three years. Quality of earnings documentation. Reduction of owner dependency — decisions need to flow through your CEO, your operations manager, your general manager — not through you. Client concentration below 20 percent in any single account. Standard operating procedures for every core revenue-generating process. Org charts with decision bands. Recurring revenue — monthly or annual. Contract quality and renewal terms. Each of these items adds to your multiple. Each missing item is a pricing tool against you. The M&A advisor’s job is to walk through that list and give you a realistic timeline to close every gap before you go to market.
How does the Titan Thesis help you get a maximum multiple?
The Titan Thesis is the pre-built proof document that assembles everything a buyer would ask for before they ask for it — financials, quality of earnings, management depth, operational systems, customer data, decision bands, recurring revenue documentation, and the full story of how the business operates without the founder. When you walk into a deal with a Titan Thesis the due diligence process becomes offensive rather than defensive. You are not scrambling to answer questions — you are presenting a pre-built case for the maximum multiple. That is what separates an A plus deal from an A deal. The preparation quality shows in the document quality. The document quality shows in the multiple.
What happens when you go to market without an M&A advisor?
You go in without a lifeguard. You walk into a deal without knowing where the reefs are, where the current is, where the danger zones are. The buyer’s team has done this dozens of times. You have done it once. Every gap they find — financials not clean, owner dependency visible, no SOPs, no recurring revenue, customer concentration too high — is a pricing tool they use against you. They do not tell you they are using it. They just reduce the multiple, increase the hold back, extend the transition requirements, and restructure the earn out until the deal looks very different from the headline number that brought you to the table.
How does an M&A advisor earn their fee on a mid-market deal?
The fee is earned in the multiple differential. The difference between going to market unprepared — where buyers find everything during diligence and use it against you — and going to market with a Titan Thesis and a great M&A advisor on your side is typically two to five multiple points. On a mid-market transaction that differential is far larger than the advisory fee. The M&A advisor does not cost money in that context. They make money — and the ones who do it right make significantly more than they charge.
What are the warning flags a great M&A advisor will raise before you sell?
The same warning flags the lifeguard raises before you enter the water. Financials not closed consistently. No quality of earnings documentation for the last three years. Owner dependency — all decisions run through the founder. Customer concentration above 20 percent in one account. No standard operating procedures. No org charts with documented decision bands. No recurring revenue or revenue that is entirely transactional. Contracts that have no renewal terms. These are the reefs in the water. A great M&A advisor finds every one of them before a buyer does — and gives you the timeline and the roadmap to clear them.
What is the Deal Grade Framework and how does it apply to your exit?
The Deal Grade Framework classifies an exit deal into one of four tiers based on preparation quality, multiple achieved, and deal structure. An A plus deal breaks above the market multiple through a fully prepared business with a Titan Thesis and experienced advisory team. An A deal captures the top of market range. A B deal captures the middle. A C deal captures the bottom. A D deal — do not do it — produces a multiple at roughly half of what the market is trading at, usually because the business went to market without preparation and gave buyers every tool they needed to reduce the price.
How do you find the right M&A advisor for your business?
Ask three questions. First — do they have a plan or protocol to get you to the top end of the multiples? Not a general answer. A specific process with specific milestones. Second — are they willing to tell you what you need to hear rather than what you want to hear? The ones who only validate you are not protecting you. Third — do they understand your industry and your buyer market well enough to know what an A plus deal looks like for a business like yours? The M&A advisor’s job is to act like the lifeguard — assess the conditions, tell you when you are not ready, and give you the green flag when everything is in place to get the maximum multiple.
Related: Titan Thesis | 5-4-3-2 Framework | BENCH Framework | Exit Ratio 360™ | Consulting in Paradise | 35 Questions to Ask an M&A Advisor | Exit Ratio 360™ on Amazon
About Scott Sylvan Bell
Scott Sylvan Bell is a mid-market exit strategy consultant and the creator of the Exit Ratio 360™ — the only 360-point business evaluation system built specifically for owners of $10M to $250M companies preparing for a sale. He works from Sacramento, California, the North Shore of Oahu, and Tahiti. His book Exit Ratio 360™ is available on Amazon. Learn more at scottsylvanbell.com/why-scott/.
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Full Video Transcript
When people hear that I do M&A, when people hear that I do consulting and I work in the world of M&A, one of the most common questions that comes up is — do I need an M&A advisor? And I’m going to let you know. Hands down, this is a super important question, especially if you’re in the mid market, between $10 million and $250 million. I’m Scott Sylvan Bell coming to you live from Haleiwa, Oahu on a perfect day to talk about business, business sales, mid markets and selling a business and M&A advisors.
I want to start by telling you a story. If you look over my shoulder right there, there’s a lifeguard tower. And you may not know this, but the lifeguards out here on the North Shore are some of the best on the planet, and there’s a reason for it. They grew up on the beach. They scuba dive, they snorkel, they surf out here, so they know where the reefs are. They’ve watched the water for hours or decades on end, and so they know where the danger zones are. Those lifeguards come out at 7, 7:30 and they prep the beach. They look at the conditions, they look at the waves, they look at how much debris ended up on the beach. Today there’s a sign right here that says don’t go in the water — because there was just a big storm that shook the North Shore. A bunch of debris ended up in the water, a bunch of garbage ended up in the water, and it’s not good.
You’ve got all the tools — the surfboard, the flags, the tower, the vision, the bullhorn. When things are going wrong that is the job of the lifeguard. They are to give you fair warning. If we’re going to compare that to an M&A advisor — the M&A advisor’s job, their role and responsibility, is to take a look at your deal and say don’t go in the water, which means that’s not a big enough multiple. They’re dragging their feet. They’re using you as some sort of gathering place for information.
If you want that A plus deal — if the market is trading for your company, your industry, at a seven to ten times multiple — then what you want is eleven, twelve, thirteen, fourteen, fifteen, sixteen times what your EBITDA is. That’s the maximum multiple. And that happens when you have a Titan Thesis, because a good M&A advisor is going to pull you aside and say, hey, time out. You’re not ready to put your business on the market. Your financials aren’t clear. You don’t have a closing date, you don’t have quality of earnings for the last three years. You have too much owner dependency. You have too much client dependency. You don’t have standard operating procedures, you don’t have org charts, you don’t have decision bands. These are all basics that you need to get that maximum multiple.
If you’ve got the bare minimum, you get an A level deal. If it’s trading at seven to ten times multiple you could get a ten. If it’s a B level deal you could get seven. If it’s a C, maybe a six. If it’s a D — standing for don’t do it — you’re probably going to get half of whatever the market is. A good M&A advisor is going to tell you what you need to hear, not what you want to hear. Your management team probably tells you what you want to hear because they want to keep their job. Find an M&A advisor that has a plan or a protocol to get you to the top end of the multiples. Just like this lifeguard — find a good, solid M&A advisor. Aloha. Mahalo.