Case Studies - M&A Deal Room

Trades & Services 🇦🇺 Australia ✅ Successful Acquisition

Plumbing Business Acquired for Zero Cash Down

A Melbourne buyer acquires a 12-year-old plumbing business using 100% asset-backed funding and seller finance — putting in $0 of personal capital.

$2.4M

Revenue

$380K

Adjusted EBITDA

3.2x

Multiple Paid

$1.21M

Total Consideration

Buyer Cash In

The Situation

The owner, aged 67, had built the business over 12 years and wanted to retire. He had no succession plan and was open to seller finance if the right buyer could demonstrate they could run the business. Revenue was stable but EBITDA had declined slightly over three years due to rising wages — a red flag that required careful analysis.

How the Deal Was Structured

Receivables lending (70%): $168K against $240K debtors book — funded at settlement

Equipment finance (35%): $182K against $520K of plant and vehicles

Surplus cash: $95K cash in business used for working capital buffer

Seller finance (gap): $765K at 0% over 5 years — seller took monthly payments from business cashflow

Key Lessons

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Owner add-backs were critical — $95K in personal expenses and above-market owner salary normalised EBITDA from $285K to $380K, justifying the multiple.

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The declining EBITDA trend triggered conservative valuation — the LBO used the latest year only, not an average, protecting the buyer.

💡

Seller finance negotiation took 3 rounds. The Chris Voss "that's right" technique — mirroring and labelling — helped the seller feel heard before he agreed to 0% interest.

✅

Payment cover ratio was 2.8x — well above the 1.5x minimum, giving the bank confidence to lend against assets.

Deal Room Tools Used

LBO Calculator Add-back Analysis Multi-year EBITDA Seller Q&A Sensitivity Analysis

Retail / eCommerce 🇬🇧 United Kingdom 🚫 Deal Killed in Due Diligence

Online Homewares Retailer — Numbers Didn't Add Up

A UK buyer nearly overpaid by $340K for an eCommerce business after the seller's "adjusted EBITDA" included non-recurring items. Benford's Law analysis flagged the issue early.

£1.8M

Claimed Revenue

£210K

Claimed EBITDA

£118K

Real EBITDA

£340K

Overpay Risk Avoided

The Red Flags

Benford's Law anomaly: First-digit distribution of transactions skewed heavily toward 1s and 2s — statistically inconsistent with natural financial data.

One-off items added back: Seller included a £47K insurance payout and £28K COVID grant as "recurring" in EBITDA calculations.

Inventory overvaluation: Stock was valued at retail, not cost. True inventory value was 40% lower than stated on the balance sheet.

Customer concentration: One marketplace (45% of revenue) had recently changed its algorithm — sales already declining at LOI stage.

The Decision

After forensic analysis, the real adjusted EBITDA was £118K — not £210K. At the same 4x multiple, the business was worth £472K, not £840K. The buyer made a revised offer at £480K. The seller rejected it and the deal fell over. Six months later the business was relisted at £550K.

Key Lessons

⚠️

Never trust seller-prepared financials without independent verification. Always ask for ATO/HMRC lodgements to cross-check revenue.

⚠️

Add-backs must be genuinely one-off and non-recurring. Government grants, insurance payouts and legal settlements don't qualify.

💡

Benford's Law is not proof of fraud — but it is an efficient early-warning system that tells you where to look harder.

✅

Walking away is a valid outcome. The best deals are the ones you don't do.

Deal Room Tools Used

Benford's Law Analysis Forensic Financial Review Ratio Analysis Add-back Normalisation

Professional Services 🇦🇺 Australia ⚠️ Distressed Acquisition

Accounting Practice — Buying a Distressed Business Below Market

A Queensland buyer acquires a struggling accounting practice at 1.2x EBITDA after two years of declining revenue — then turns it around using the 100-day plan framework.

$1.1M

Revenue (declining)

-$85K

EBITDA Year 1

$210K

Normalised EBITDA

$252K

Purchase Price

18mo

Payback Period

Why It Was Distressed

The original owner had retired in place — still drawing a salary but not servicing clients. Two senior accountants had left, taking key relationships with them. Revenue had fallen 28% over two years. On face value the EBITDA was negative. But the client list, software systems and remaining staff had real value — the business just needed active management.

How the Buyer Valued It

Excluded latest year EBITDA: -$85K loss year was excluded. Used average of prior two years ($210K) as normalised earnings — "lumpy" pattern justified averaging.

Owner salary add-back: $180K owner salary for a role the buyer would perform themselves — added back to get true EBITDA.

Conservative multiple: 1.2x applied due to client concentration risk and revenue trend — well below industry average of 2.5x for accounting practices.

100% seller finance: No bank would lend on a loss-making business. Seller agreed to 100% vendor finance at 5% over 4 years — motivated to sell after failed sale attempts.

The 100-Day Turnaround

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Days 1-30: Met every client personally. Identified 12 at-risk relationships. Retained 10 through direct engagement and fee restructuring.

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Days 31-60: Hired one senior accountant at market rate, replacing the two who had left at a net saving of $45K/year.

📈

Days 61-100: Introduced advisory services (SMSF, business advisory) that the previous owner had ignored. Added $95K in new revenue in the first quarter.

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By month 18 the practice was generating $340K EBITDA — a 62% improvement on normalised earnings at acquisition.

Key Lessons

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Distressed businesses require conservative multiples AND a clear operational plan before buying — not just a low price.

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The lumpy EBITDA rule saved the buyer from over-paying. Using the loss year would have produced a negative valuation — using the average gave a fair picture.

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Motivated sellers accept creative terms. Vendor finance at 0-5% is often available when banks won't lend — but only if you can demonstrate a credible turnaround plan.

Deal Room Tools Used

LBO Calculator Lumpy EBITDA Averaging 100-Day Plan Generator Seller Q&A Sensitivity Analysis

Industrial Services 🇬🇧 United Kingdom ✅ Deal Structured Successfully

£5M Industrial Deal — Zero Buyer Cash, and the Tax Trap That Nearly Derailed It

A Northern Ireland industrial services company with £1M EBITDA is acquired for £5M with no buyer cash. The seller's deferred consideration creates a CGT bill larger than the cash they received at completion — and three legal structures that solve it.

£4.13M

Revenue (2024)

£1.0M

EBITDA

5.0x

Multiple

£0

Buyer Cash In

£278K

Tax Trap Avoided

The Situation

A Northern Ireland industrial services company with three years of strong growth — EBITDA rising from £117K to £1M — was being acquired by a buyer with no personal capital. The deal required 100% asset-backed funding at close plus £4.14M in vendor (seller) finance paid over 7 years. The structure worked on paper. Then the tax position was calculated.

The Problem Nobody Anticipated

Asset lending at close: £860K raised against receivables (70%), fixed assets (10%) and inventory (5%) — buyer puts in £0

Vendor finance: £4.14M at 5% over 7 years — EBITDA coverage 1.40x, workable with monthly management account covenant

The tax trap: Under TCGA 1992 s.48, the entire gain is taxed in Year 1 — CGT bill of £1,138,560 against upfront cash of only £860,000. The seller owes £278,560 more in tax than they received.

Solution: Non-QCB loan note with s.169Q election — locks in 18% BADR rate and aligns CGT payments to note redemptions as cash arrives

Key Lessons

⚠️

Vendor finance creates a structural CGT cash flow problem that most sellers (and many advisers) don't anticipate until it is too late to restructure.

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A non-QCB loan note with a s.169Q / s.169R election (TCGA 1992) solves the problem — CGT follows cash, not the completion date.

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HMRC s.280 instalment elections provide a belt-and-braces backstop — CGT payable in proportional instalments over up to 8 years on ascertainable deferred consideration.

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Spousal share transfer before exchange doubles the effective BADR lifetime limit to £2M — saving up to £119K vs no planning on a £5M deal.

📄 Read Full Analysis → 6-page PDF • Read-only preview • UK tax • Vendor finance structuring

Deal Room Tools Used

LBO Calculator Vendor Finance Modelling UK CGT Report BADR Analysis Loan Note Structuring DSCR Calculator

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