01Situation
A founder-owned CPG brand at $40-50M revenue, trailing $3.5-4.5M of as-reported EBITDA, had outgrown the founder seat — the trade-spend cycle, retailer-deduction recovery, and the wholesale-versus-DTC P&L conversations were all running on personal memory. The board had drifted into a no-decision pattern for eighteen months. The founder wanted out but had no clean way to articulate what the business actually earned at run-rate, what was structural versus one-time, and what a strategic acquirer would credit. Two regional bankers had quoted indicative ranges twelve months apart that moved by $20M for no operational reason. Our brief: get the business diligence-ready, find normalised EBITDA, and run the strategic outreach inside one calendar year.
02The work
- 01 Quality of earnings rebuild from the GL up. Three months on the books — re-cut COGS by channel, separated trade spend into MCB / slotting / promo with proper accruals, audited the prepaid expense and accrued-liability ledger, and isolated thirty-one one-time items the founder had been carrying as run-rate. Recovered 22% of normalised EBITDA versus the as-reported number. The QoE wasn't a deliverable; it was the deck.
- 02 Working capital peg modelling, eighteen months pre-LOI. Built the trailing-twelve-month operating-working-capital cycle by channel, identified the unrepresentative quarters, and modelled the seller-defensible peg before any buyer touched the file. When peg came up in negotiation, we were on our second draft, not our first.
- 03 Channel-by-channel margin story. Most CPG brands present a blended gross margin and lose multiple turns on it. We re-cut to four channels — DTC, marketplace, big-box, regional wholesale — with channel-specific landed cost, slotting and freight. Sent strategic acquirers the channel story, not the blended story. Three of five top-tier bidders explicitly cited the channel separation in their LOIs.
- 04 Strategic outreach (no banker hand-off). Targeted twenty-two strategic acquirers across consumer holdings, category-adjacent strategics, and one PE-backed platform. Founder ran four CIM-light intro calls with us in the room. Two LOIs at week ten, three more after the management-meeting round. Selected the strategic with the cleanest earn-out structure — not the highest headline.
- 05 Negotiation and close. Defended the peg through three buyer rounds. Held the normalised EBITDA position through QoE. Closed in month nine with a structure that paid out 88% of the headline at close — earn-out tied to ordinary-course retention metrics the founder could deliver in their sleep.
03Result
Closed at a 0.7x multiple uplift versus the higher of the two indicative banker ranges from the prior year. Working-capital peg held within $300k of our modelled position — five months of internal modelling earned roughly nine times its cost in the negotiation alone. 22% of normalised EBITDA was recovered from the QoE process; at the close multiple, that single workstream paid for the engagement four times over. Founder stayed in seat for a six-month transition and the earn-out hit at month fourteen with no rebasing. The strategic acquirer's post-close integration team noted on the wrap call that this was the cleanest mid-market deal book they'd seen from a founder-led CPG brand all year.
04Lessons
- A diligence-ready QoE done eighteen months early funds itself in EBITDA recovery alone — before any multiple uplift.
- Working-capital peg negotiations move 0.3-0.5x of valuation post-LOI. Modelling the peg before the buyer sees the file is the highest-ROI working session in any sell-side process.
- Strategic acquirers credit channel-by-channel margin stories. Founders default to blended margin and lose turns of multiple on a presentation choice.