The Buyer Already Has a Number. This Is How You Get Yours.
When a private equity firm, search fund, or strategic acquirer evaluates your industrial or distribution business, they do not use your accountant's valuation. They build their own — using EBITDA adjustments, quality of earnings analysis, and industry-specific acquisition multiples that most business owners have never seen applied to their own financials. A NexusGate valuation shows you exactly what that analysis looks like for your business — before any of those conversations begin.
You'll need approximate revenue and earnings figures for the last 1–2 years. No documents to upload at this stage.
Your Accountant's Number and the Buyer's Number Are Not the Same Number.
When your CPA prepares your financials, they are optimizing for tax efficiency. When a private equity firm models your business, they are doing something entirely different — and the number they arrive at is shaped by a set of adjustments that most operators never see until they are already in a deal process.
This is the quality of earnings gap. And it is where value gets transferred from sellers to buyers at the most critical moment of a business owner's financial life.
Here is what that process actually looks like. A PE firm's acquisition team takes your reported EBITDA and begins recasting it. Owner compensation above market rate gets added back. One-time expenses that inflate costs get normalized. Revenue from a customer who represents 40% of your top line gets discounted because concentration risk increases the buyer's post-close risk exposure. The cost of the automation upgrade your business has been deferring gets modeled as a capital requirement that comes off the enterprise value. By the time a sophisticated buyer is done recasting your financials, their working EBITDA number — the one they are actually willing to pay a multiple on — may be meaningfully different from the number on your tax return.
That adjusted EBITDA, multiplied by the sector-specific acquisition multiple for your industry and deal size, is what determines the offer you receive.
A NexusGate valuation does not give you a number designed to make you feel good about your business. It gives you the number the way an industrial acquirer would build it — so you understand the mechanics before the process begins, not after the LOI lands.
How Private Equity Firms Value Industrial and Distribution Businesses
Understanding the methodology behind your number is the first step toward influencing it. Industrial and distribution businesses in the lower middle market — generally $5M to $75M in revenue — are typically valued using a multiple of adjusted EBITDA, where the multiple is determined by a combination of deal size, industry sector, growth trajectory, and business quality factors.
EBITDA Multiple Range by Deal Size Businesses with $1M to $2M in adjusted EBITDA typically trade at 4x to 6x in the lower middle market. Businesses with $2M to $5M EBITDA typically trade at 5x to 7x. Businesses above $5M EBITDA begin attracting more institutional capital and multiples can reach 7x to 9x or higher depending on sector and growth profile. These are ranges, not guarantees — and they shift significantly based on the quality adjustments described below.
The Five Adjustments That Move Your Number Most
Customer Concentration. If your top three customers represent more than 50% of revenue, buyers apply a concentration discount because post-close revenue concentration represents existential risk. Diversifying that concentration before going to market is one of the highest-ROI activities an operator can undertake in the 18 to 36 months before a transaction.
Owner Dependency. If the business cannot operate without the owner's daily presence — in sales relationships, in operations, in customer service — buyers price in a transition risk premium that reduces the multiple. Documented processes, a capable management layer, and demonstrable owner extraction over time are the antidote.
Automation Readiness. Industrial businesses with manual processes in areas where comparable facilities have deployed automation are evaluated against what deployment would cost post-close. Buyers model that cost as a capital requirement and subtract it from what they are willing to pay today. An operator who has deployed automation, or who has a credible roadmap and timeline for it, commands a meaningfully higher adjusted value.
Working Capital Normalization. Buyers analyze your trailing twelve months of working capital — receivables, payables, inventory — and establish a "normal" working capital requirement. Businesses with bloated inventory or slow-collecting receivables face working capital peg adjustments that reduce net proceeds at close.
EBITDA Quality and Sustainability. Not all EBITDA is valued equally. Revenue that is recurring, contracted, or relationship-based commands a higher multiple than project-based or spot revenue. Buyers discount EBITDA that comes from one-time events, non-recurring customers, or revenue categories that required above-market owner involvement to generate.
Understanding where your business sits on each of these dimensions — before any buyer does the analysis — is the work NexusGate was built to enable.
A Single Valuation Is a Snapshot. Three Years of Valuations Is a Strategy.
Here's what separates the owners who exit at maximum value from the ones who leave money on the table — and it is not luck, connections, or timing.
It is preparation. Specifically, it is knowing your valuation number early enough to actually do something about it.
A business valuation taken today tells you where you stand. It tells you your current EBITDA multiple, your key value drivers, and — critically — the specific factors that are suppressing your valuation below what it could be. Customer concentration that's too high. Owner dependency that makes buyers nervous. Revenue mix that doesn't carry the multiple your operations deserve. Margin structure that looks thin against industry comparables.
Every one of those factors is addressable. But only if you know about them with enough runway to fix them.
That is why the owners who achieve the highest exit prices don't start their exit process six months before they go to market. They start three years before.
Here's Exactly What Happens When You Request a Valuation.
Here, creativity meets opportunity. Whatever you're building, we're here to help you take the first step with confidence. Driven by curiosity and built on purpose, this is where bold thinking meets thoughtful execution. Let’s create something meaningful together.
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After clicking the button below, you'll complete a short intake form — no accountant required, no financials to upload yet. We ask for revenue range, EBITDA or owner earnings range, industry, employee count, and a brief description of the business. It takes approximately ten minutes. Nothing you submit is shared with buyers, investors, or third parties.
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NexusGate prepares your valuation estimate using current M&A comparable transactions in your industry, normalized earnings analysis based on the figures you provide, and the specific value driver and detractor profile of your business. This is not a formula output or a generic multiple calculator. It is a professionally prepared document that reflects how qualified buyers in your sector are currently pricing businesses of your size and profile. Turnaround is typically five to seven business days.
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We deliver a written valuation report by email, followed by a scheduled call to walk through the findings, answer questions, and discuss what the numbers mean for your specific situation and timeline. There is no obligation to engage NexusGate for any additional service. The report is yours to keep.
The Number Every Business Owner Needs To Know.
Most business owners either widely overestimate or deeply underestimate what their business would sell for. Both are dangerous. Overstating means you'll turn away legitimate offers and waste years waiting for a price that never materializes. Underestimating means you'll leave hundreds of thousands — or millions — on the table.
A NexusGate business valuation gives you a market-grounded, professionally prepared estimate of your business's value based on your financials, your industry, your growth trajectory, and current M&A transaction comparables in your sector.
What the NexusGate Valuation Delivers
A NexusGate valuation is not a broker's opinion of value designed to get you to sign an engagement letter. It is an analysis of your business from the buyer's perspective — the same analytical framework an industrial acquirer would apply, translated into language you can use before any transaction process begins.
The report includes:
Adjusted EBITDA Build — Your reported EBITDA recasted using the normalization adjustments an industrial buyer would apply: owner compensation add-backs, one-time expense normalization, and revenue quality assessment. This is the number that determines your offer, not your tax return EBITDA.
Sector-Specific Multiple Range — Acquisition multiple benchmarks drawn from comparable transactions in your specific industrial or distribution subsector, sized to your revenue and EBITDA range. Not a generic "3x to 8x" range — a grounded estimate of where your business competes for buyer attention.
Value Driver and Detractor Analysis — A frank assessment of the five dimensions buyers score most heavily: customer concentration, owner dependency, automation readiness, working capital efficiency, and EBITDA quality. This tells you where your number is strong and where it is being discounted before you hear it from a buyer.
Comparable Transaction Reference — Recent M&A transactions in your sector at comparable deal sizes, with commentary on what drove valuations above or below the midpoint range.
18-Month Value Enhancement Roadmap — The specific operational and financial changes that would move your adjusted EBITDA and your multiple before a transaction process begins. This is where the 18 to 36 months of pre-transaction work pays off.
Buyer Profile and Capital Source Match — An initial characterization of which buyer categories — PE platform, PE add-on, family office, strategic acquirer — are most likely to be motivated buyers for your specific business, and why.
Your Business Has a Number. Let's Build It the Way Buyers Do.
Whether you received an inbound inquiry last week or you expect one in the next two to three years, the most useful thing you can do right now is understand how industrial buyers are currently modeling businesses in your sector — and where yours sits in that analysis.
The NexusGate valuation process starts with a confidential conversation about your business. No commitment, no engagement letter, no pressure toward a transaction timeline that serves someone else's interests. Just an honest assessment of where you stand and what the next 18 to 36 months could do for your number if you use the window well.