Selling a shrinking business to three buyers who knew it was shrinking

The situation

The email arrived on a Tuesday, three weeks into the sale process: the municipality that had anchored roughly a third of Hodan's snow removal revenue was not renewing its contract. Two weeks after that, a commercial property management client of similar size gave notice it was consolidating its landscaping vendors and would not be renewing either. Hodan had built the business over twelve years, starting it as a side venture while she still worked a letter carrier route in King City, and by the time she decided to sell, it employed close to thirty people across landscaping crews in summer and snow removal in winter. She had not expected to lose two anchor contracts in the middle of selling it.

Ifrah, who had joined the business six years earlier as an operations partner and held a minority stake, had pushed for the sale in the first place, arguing the two of them were better positioned to exit while the business was strong than to keep growing it themselves. That timing now looked unlucky. The buyer interest that remained after the contract losses became public came from a syndicate of three sponsors, co-investing together because none of them wanted to fund the acquisition alone at the size Hodan's business represented. Bohdan led the group's negotiations and made no secret of the syndicate's position: three well-capitalized investors could afford to wait Hodan out, and one seller losing contracts in real time could not.

The deal, before the contract losses, had been valued in the range of eight to fifteen million dollars, based on the business's recent revenue and its recurring contract base. That contract base was exactly what had just shrunk. Hodan and Ifrah still had real value to sell: equipment, remaining contracts, trained crews, and a operating history that mattered to buyers who understood the seasonal landscaping and snow removal business. But the loss of the anchor contracts mid-process meant the number the syndicate had originally discussed was no longer the number they were prepared to pay, and they said so plainly.

Hodan came to us with the syndicate's revised term sheet already in hand, offering roughly forty percent below the original discussed range, along with a clear message from Bohdan that the syndicate was in no hurry and could revisit the offer downward again if Hodan tried to shop the business elsewhere while its numbers kept sliding.

What made this urgent

A club deal, where multiple sponsors co-invest because the transaction is too large or too risky for any one of them to fund alone, changes the dynamics of a negotiation in ways that matter to a seller. Each sponsor in the syndicate has less individually at stake than a single buyer would, which means the group can afford to walk away from a deal, or wait for better terms, more easily than a seller who needs the transaction to close. Bohdan's group understood this and used it as a stated part of their negotiating position rather than something implied.

Time worked against Hodan in a specific way. Landscaping and snow removal contracts are typically renewed or lost on an annual cycle, and the two contracts she had just lost would not be replaceable within the sale timeline; any buyer diligence would confirm the revenue was genuinely gone, not a temporary dip. The longer the sale process dragged on while Hodan tried to hold out for the original price, the more the business's trailing numbers would reflect the lower revenue base, and the weaker her negotiating position would become with every month that passed.

The syndicate's structure also meant Hodan was negotiating against a moving target. Because three sponsors held separate views on price and risk, Bohdan's revised offers sometimes reflected internal disagreement within the syndicate as much as a genuine market assessment of the business, and it was not always clear which of the sponsors was driving a given position. Understanding when a stated concession was real and when it was one sponsor's caution being presented as the group's final word mattered to how we advised Hodan to respond.

What made the situation urgent, beyond the money, was that Hodan needed her thirty employees, several of whom had been with her for most of the business's history, to have a stable transition. A drawn-out negotiation that ended in a rushed, distressed sale would put those jobs at more risk than a slower process that protected the remaining contract base. Balancing the financial pressure to close quickly against the operational need to close well was the tension the whole file turned on.

Ifrah's position added a further layer. As a minority stakeholder who had pushed for the original sale, she felt some responsibility for the timing, and she was inclined to accept the syndicate's revised terms quickly rather than risk the deal collapsing altogether. Hodan did not share that instinct, and reconciling the two of them on how hard to push back against a syndicate that had made its patience explicit was part of what the negotiation needed to resolve internally before it could be resolved with Bohdan's group.

What we did

1. Verified which parts of the business's value the contract losses actually touched. We worked with Hodan and Ifrah to separate the lost revenue from the parts of the business unaffected by it: the equipment fleet, the remaining contracts, and the trained crews, none of which had lost value simply because two contracts had ended. This gave us a factual basis to push back on the syndicate's forty percent discount as overstated, since equipment and trained crews do not lose value simply because two contracts among many were not renewed.
2. Commissioned a revised valuation reflecting the actual, not exaggerated, impact. An independent valuation based on the remaining contract base and asset value came in well above the syndicate's revised offer, giving Hodan a documented number to negotiate from rather than relying on instinct about what felt fair, and giving Ifrah a concrete reason to hold firm rather than accept the first revised offer out of anxiety about losing the deal entirely.
3. Declined to negotiate against an unclear counterparty. When Bohdan's offers shifted in ways that seemed to reflect internal disagreement among the three sponsors, we asked directly which terms were the syndicate's firm position and which remained open, refusing to keep revising Hodan's terms against a moving target without that clarity, since conceding ground to an uncertain position only invites the next uncertain position.
4. Slowed the process deliberately rather than rushing to close. Despite the pressure of declining numbers and Ifrah's preference to move quickly, we advised against a rushed sale, because a distressed, hurried close was more likely to produce the syndicate's lowest offer than a properly paced negotiation that let the revised valuation do its work and gave Bohdan's group time to reconsider their opening position.
5. Structured an earnout tied to remaining contract retention. To bridge the gap between Hodan's valuation and the syndicate's caution about further revenue loss, we proposed a portion of the price be paid contingent on the remaining contracts renewing over the following two years, which gave the syndicate downside protection without requiring Hodan to accept their full discount upfront and absorb all of the remaining uncertainty herself.
6. Negotiated employment protections for the transition. Because Hodan's priority extended beyond price, we secured written commitments for the crew leads and longest-tenured staff to be retained through at least one full season after closing, at comparable pay and role, addressing her concern for the people who had built the business alongside her even where it added modest cost to the deal and required trading away some negotiating room elsewhere with the syndicate.
7. Closed the price gap through the earnout structure rather than a straight discount. The final agreement combined a reduced upfront price with the earnout, landing well above the syndicate's original lowball offer while still reflecting the real impact of the lost contracts, rather than the exaggerated one Bohdan's group had first proposed as opening leverage. This let Hodan accept a lower number today without giving up her claim to the business's fuller value if the remaining contracts held, as her valuation had projected.

The outcome

The sale closed roughly five months after the syndicate's initial revised offer, at an upfront price about twenty percent below the original pre-loss range, with the earnout structured to bring the total consideration closer to the independently valued figure if the remaining contracts renewed as expected. That was a real concession from where Hodan had hoped to land before the two anchor contracts fell through, and both she and Ifrah accepted it as the honest cost of losing that revenue mid-process rather than a number either side considered fully fair.

The syndicate did not get the forty percent discount Bohdan had originally proposed, and the earnout meant they retained some of the downside protection they had been negotiating for without Hodan absorbing the full risk of the remaining contracts not renewing. Neither side left the table with everything it had opened with, which is close to what a negotiation against a well-capitalized syndicate willing to wait usually produces for a seller under time pressure. Bohdan's group did secure a lower upfront price than the pre-loss range, which was the outcome they had been signalling from their first revised offer, even if it landed well short of their opening position.

The employment protections held through the transition, and the crew leads Hodan had been most concerned about stayed on through the first season under the new ownership. Most of the remaining contracts renewed within the earnout's two-year window, which triggered the corresponding portion of the earnout payment; one did not renew on schedule, and that share of the earnout went unpaid, leaving Hodan and Ifrah with somewhat less than the independent valuation had suggested was achievable under better circumstances. One of the two originally lost contracts was separately replaced with a comparable one within the following year, a business recovery that helped the surviving operation but fell outside what the earnout itself had been structured to pay for.

Hodan described the outcome afterward as fair given the circumstances, though not the sale she had planned for when she first opened the process. Ifrah, who had pushed for speed throughout, later said the slower pace the negotiation actually took had produced a better result than the quick acceptance she had initially favoured, even though the wait had tested her patience at the time.

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