Why Did Two Buyers Give Me Two Different Numbers?

Two offers, same business, and a wide gap between them

A 15-person electrical contractor at about $3.1M in revenue receives an offer in March and another in October. Same statements, same customer list, same crew, and the two numbers are not close.

The owner's conclusion is that one of them is wrong. Neither is.

Two buyers value the same business differently because each is pricing what they think happens after the seller leaves, and that judgment varies with what they intend to do with the owner's role, what their capital costs, and which add-backs they accept. The spread is a readable statement about risk rather than an error in somebody's arithmetic.

Roughly 86% of small business owners have either no professional valuation or only a rough estimate, so most sellers meet two conflicting numbers with nothing of their own to compare them against.

A spread is information, not noise

The instinct is to average the two, or to pick the higher one and treat the other as a lowball. Both discard the useful part.

Each number encodes a set of assumptions. Read side by side, two offers tell you which risks are visible from the outside and how much each one costs.

That is worth more than either figure. A seller who understands why the March offer was lower can often change the thing that caused it before the next conversation.

The method underneath any offer is standard enough to learn in an afternoon. How to value a small business explains the approaches, and this article explains why two people using the same approach disagree.

Each offer encodes assumptions. Two offers, read together, tell you which risks are visible from outside.

Four inputs that vary between buyers

Three of the four are about your business rather than about the market.

• What they intend to do with your role. A buyer who will operate the business themselves prices your absence differently from one buying it to run semi-absentee with a manager. This is usually the largest single difference.
• What their capital costs. SBA 7(a) ran at a FY2025 median rate of 9.50% with 84.4% of loans carrying variable rates, so a leveraged buyer and a cash buyer are solving different equations.
• Which add-backs they accept. Your vehicle, your phone, the family member on payroll. One buyer credits them and the next does not, and that gap alone moves the earnings base.
• What they intend to do with the business. A competitor removing duplicate overhead sees different economics from an individual buying a job with a manager attached.

The electrical contractor's spread was mostly the first input. The March buyer intended to run it personally and the October buyer already had a manager to place.

The add-back input is worth checking on your own before either buyer does. Running the substitution test on your own margins tells you which add-backs will survive scrutiny and which will not.

Some of the spread is also just the earnings basis being different. The difference between EBITDA and SDE accounts for part of almost every gap between a strategic buyer's number and an individual's.

The higher number is not automatically the better deal

Compare structure before you compare headlines. The larger figure frequently carries the larger carried note, the longer earnout, or the longer required transition.

Ask three questions of each offer. How much is cash at closing, how much is contingent on performance you no longer control, and how long are you required to stay.

An offer that is 15% higher on paper and pays half of it over four years against targets is not obviously better than a smaller offer that mostly closes. It might be, and the point is that it is not obvious.

Sellers who anchor on the headline number tend to negotiate the wrong variable for weeks. Structure is where the actual difference in what you receive usually lives.

One specific risk that moves both the headline and the structure is worth pricing yourself first. Customer concentration is visible on the first page of any revenue breakdown, and every buyer prices it slightly differently.

Ask each buyer which risk drove their number

One question, asked of both, and it costs nothing: what is the main risk you are pricing in.

Buyers answer this more openly than sellers expect, because it is the argument for their number. You will hear things like the owner does all the estimating, or the top account has no contract, or there is only one year of clean books.

Write down every answer. Across two or three buyers, the repeated items are your work list, and they arrived free and specific.

The electrical contractor heard the same answer twice: the owner priced every large job. That one sentence, heard from two strangers seven months apart, was worth more than either offer.

The repeated answer across two buyers is your work list, and it arrived free.

What you can do before the next offer

Three of the four inputs are yours, which means the spread is largely something you can move.

Owner dependence is the big one and the one both buyers were describing. On a $300,000-SDE business the gap between an owner-dependent operation and an owner-light one is $555,000 on identical earnings, which is why it dominates the difference between two offers on the same business.

Records quality is second and slowest. Clean, separated statements over three years remove an entire category of buyer objection and cannot be produced quickly.

Concentration is third. It is fixable faster than most sellers think, because reducing the risk of the account leaving does the same work as reducing its share.

What closing the dependence actually involves is a specific piece of work rather than a resolution. What changes in the 90 days after a modernization is the honest version of what that takes and what persists.

Before any of it, get a read of your own so the next offer is not the only number in the room. The Monday move after a set of scores is where that starts, and it is one decision rather than a plan.

If you are earlier than offers and just want the starting question answered, that has its own article. What is my business worth is the entry point, and it is worth reading before a broker frames it for you.

Ask both buyers what risk drove their number, and write down what repeats. That list is what you work between now and the next offer.

The free Keystone diagnostic is 18 questions and about four minutes. It returns three scores and an estimated sale price, calibrated against 10 years of BizBuySell Insight Reports and 1.6M+ SBA 7(a) loan records, so you have a number of your own to hold two offers against.

Get your three scores and an estimated sale price, free, at https://app.trykeystone.io.

One reading gives you a position. Holding the same read across the months between offers is what tells you whether the risk each buyer named is actually getting smaller, and the paid tier keeps that history.

Current tiers and what each one includes are on the pricing page.

FAQ

Why do two buyers value the same business differently?

Because each prices what they think happens after the seller leaves, and that varies with what they intend to do with the owner's role, what their capital costs, and which add-backs they accept. Three of those four inputs are about the business rather than the market.

Which valuation should I believe?

Neither on its own, because value depends on the buyer and the structure as much as on the earnings. Use the spread as information: ask each buyer which risk drove their number and treat the repeated answers as your work list.

Is the higher offer always the better deal?

No. The larger headline frequently carries the larger seller note, the longer earnout, or the longer required transition, so compare cash at closing, contingent amounts, and required stay before comparing totals.

What can I change before the next offer?

Owner dependence first, because it dominates the difference between two offers on the same business. Then records quality, which is slow, and customer concentration, which is faster to reduce than most sellers expect.