Case study · Professional Services
Selling a founder-owned engineering firm at 7.8× EBITDA
A founder-owned engineering consultancy with $30M in revenue sold at 7.8× EBITDA, signed 41 days after diligence began and closed with no price adjustments.
From diligence start to signing
Price adjustments at close
Best indicative multiple, by bid round
Client
Engineering consultancy · $30M revenue
Revenue
$15–50M
Engagement
11 months
The firm provided civil and structural engineering services, with about $30M in revenue and two founding owners who wanted to sell within two years. An early conversation with a strategic buyer pointed to a multiple near 6× EBITDA, and the owners suspected their own numbers were holding the price down.
They were right. Reported EBITDA mixed owner compensation, family payroll and rent on an office owned by one of the founders. Work in progress was booked at each partner’s discretion, so monthly revenue swung by several hundred thousand dollars. There was no real monthly close, only a year-end adjustment by the outside accountant, and no working capital history a buyer could use to set a peg.
Two clients made up just over a quarter of revenue, and nobody had documented the contract terms, renewal dates or margin on that work.
Daniel Rowe led the engagement over 11 months, with Sam Iverson running the close and reporting.
Months 1–3: clean monthly numbers. A five-day close, a consistent work-in-progress method agreed with the firm’s accountant, and a monthly board pack for the owners covering utilization, project margin and cash.
Months 3–6: quality of earnings dry run. We rebuilt adjusted EBITDA with support for every add-back, including owner pay at market rates and the related-party lease at market rent, and documented concentration and margin for the largest clients.
Months 6–8: working capital and data room. Twenty-four months of net working capital, a proposed peg range and a data room indexed the way buyers’ diligence teams read it.
Months 8–11: live process. The owners’ sell-side advisor ran outreach and three bid rounds. We answered financial diligence requests from one log and kept the deal model current as terms moved.
The owners’ M&A counsel handled the purchase agreement, and their tax advisors handled deal structure.
The best indicative multiple rose with each bid round, from 5.9× to 6.4× and then 7.1×, and the final agreed price was 7.8× adjusted EBITDA. Buyers could test every add-back against its support, so the adjusted figure held through their own quality of earnings review.
Signing came 41 days after the winning buyer began diligence. Because the peg was set from two years of monthly history, there were no price adjustments at close: the price agreed at signing was the price paid.
The managing partner’s summary is that buyers found nothing the firm had not already found itself.
Figures are from a demo engagement and are illustrative. Past results do not predict future outcomes.
Chris T.
Managing Partner, engineering consultancy
Client, people and figures are fictional demo content. Past results do not predict future outcomes. Disclaimer
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