The Price Three Siblings Agreed On Before the Numbers Changed

The situation

The plan had been simple enough, worked out over a Sunday dinner more than a discussion with any outside advisor. Kerem, Marek, and Piotr, three siblings who had jointly owned and built a metal fabrication shop in Almonte since inheriting it from their father, had decided it was time to sell. Kerem still worked the floor most days as the shop's lead welder. Marek had gone in a different direction years earlier, working full-time as a firefighter, but kept his ownership stake and sat in on major decisions. Piotr ran the business's day-to-day operations and client relationships. Between them, they settled on a number, roughly twenty-two million dollars, based loosely on what they had heard a comparable shop two towns over had sold for the previous year, and on their own sense of what the business was worth to them personally after decades of work.

They were not wrong to want out. All three were ready for a change, and the business had a loyal customer base and a solid reputation for precision fabrication work built up over years. But settling on a price before doing any of the work that normally comes before putting a business on the market, a proper valuation, an honest look at recent financial trends, a sense of what a buyer's due diligence team would actually find, meant the number in their heads was more a wish than an assessment.

It also meant the timing worked against them in a way none of the three had noticed. The shop had lost its largest customer roughly eight months before they began actively marketing the business, a long-standing contract that had accounted for close to a third of annual revenue, and had not yet replaced that volume when a buyer, a mid-sized manufacturing group looking to expand its fabrication capacity, showed real interest at a price close to what the siblings had originally anchored on.

The early conversations went well. The buyer's initial offer, delivered after a first round of informal discussions, came close enough to the siblings' twenty-two million dollar number that all three began planning, quietly, for what came after: Kerem talked about finally slowing down, Marek about paying off his mortgage, Piotr about starting something smaller of his own. That was the plan before the buyer's diligence team actually opened the books.

What the documents showed

Due diligence is where a buyer stops relying on what a seller says about the business and starts relying on what the business's own records actually show. In this case, that shift mattered more than usual, because the siblings' anchor price had been set based on an impression of the business's value rather than a hard look at its trend line.

What the financial records showed, once the buyer's accountants worked through them, was a business whose revenue had declined by close to a fifth over the trailing twelve months, driven almost entirely by the loss of that single major customer contract, with no comparable replacement business signed to offset it. The shop's margins on remaining work were healthy, and its reputation with existing customers was clearly strong, but a buyer valuing the business on a multiple of its recent earnings was looking at a materially smaller number than the siblings had been picturing when they set their price around the dinner table months earlier.

The records also showed something the siblings themselves had not fully appreciated: two of their next-largest customers, together representing close to another quarter of remaining revenue, were operating under contracts that would come up for renewal within the year following any sale, with no formal commitment beyond that point. To a buyer, that reads as concentration risk stacked on top of an already declining base, exactly the combination that makes an acquisition target harder to value with confidence and easier to discount aggressively.

None of this meant the business was in serious trouble. It meant the documents told a more complicated story than the siblings' gut-feel price had assumed, and that the gap between what they expected and what a rigorous buyer would actually pay was real, not a negotiating tactic on the buyer's part. Businesses that lose a major customer are common enough; the mistake here was not the loss itself but setting an expectation, and beginning to make personal plans around it, before anyone had tested that expectation against the underlying numbers.

For three siblings who had already started picturing life after the sale, watching the buyer's tone shift from enthusiastic to cautious partway through negotiations, once its team had actually reviewed the documents, was a difficult adjustment. It required resetting expectations quickly, and honestly, rather than digging in on a number the documents no longer supported.

What we did

1. Reviewed the buyer's diligence findings alongside the siblings' own financial records before responding to the buyer's revised position, confirming which parts of the buyer's revised valuation reflected the actual revenue decline and customer concentration, and which parts, if any, were simply an opening move to renegotiate downward. That distinction shaped every decision that followed, since conceding ground the documents did not actually require would have cost the siblings money for no reason.
2. Advised the siblings to hold off on any further personal planning around the original number until a revised, defensible price was actually agreed, since continuing to negotiate from an anchor the documents no longer supported was only delaying a harder conversation the siblings needed to have with each other. Naming that directly, early, spared them a longer and more painful adjustment later in the process.
3. Prepared a realistic, evidence-based counter-valuation, incorporating the lost contract and the upcoming renewal risk honestly rather than minimizing them, because a counter-position built on the same shaky assumptions as the original price would have had no credibility with a buyer that had already seen the real numbers. Owning the weak points up front made the parts of our valuation that pushed back against the buyer's estimate far more persuasive.
4. Negotiated an earn-out structure tied to customer retention, so that if the two at-risk contracts renewed on similar terms after closing, the siblings would receive additional payments reflecting that outcome, rather than accepting a flat, permanently discounted price for risk that might not actually materialize. This let both sides price the uncertainty instead of arguing over whose guess about it was more reasonable.
5. Renegotiated the closing timeline to fall after at least one of the at-risk renewal decisions was expected, giving the buyer more certainty about the business it was acquiring and giving the siblings a real chance to demonstrate the customer relationships were stable before the price was finally locked in. A short delay bought both sides real information instead of leaving the whole valuation resting on a guess.
6. Kept all three siblings aligned through the renegotiation, since Kerem, closest to daily operations, initially wanted to fight harder for the original number, while Marek and Piotr were more willing to accept a lower price to get the deal done. We met with all three together rather than separately, because an unresolved split between them, visible to the buyer, would have weakened their position at the table.
7. Documented the final agreed price and earn-out terms clearly enough that none of the three would later dispute how proceeds should be divided, including exactly how the earn-out payment would be calculated and split if only one of the two at-risk contracts renewed. The process itself became a lesson that decisions made casually among family members need the same rigor as decisions made with an outside party.

The outcome

The deal closed roughly five months after the buyer's diligence team first flagged the revenue decline, at a price close to seventeen million dollars, several million below the siblings' original anchor figure, with an earn-out component tied to renewal of the two at-risk customer contracts. One of those two contracts renewed on comparable terms within the earn-out window; the other did not, having been lost to a competitor for reasons unconnected to the sale itself. The siblings received the earn-out payment tied to the contract that renewed, and did not receive the portion tied to the one that did not.

This was not the outcome any of the three had pictured over that Sunday dinner months earlier. The gap between twenty-two million and the roughly seventeen million the business ultimately traded for, plus a partial earn-out, represents real value the siblings did not receive, a direct consequence of setting an expectation before testing it against the business's actual trajectory. What the process did contain was the damage beyond that: by responding to the buyer's revised position with a credible, document-supported counter-position rather than either walking away or accepting the buyer's first lowball number outright, the siblings avoided both a collapsed deal and an even steeper discount.

Kerem, Marek, and Piotr still completed the sale, still moved on to the plans they had begun making, just on a smaller number and a longer timeline than they had first assumed. The lesson the three of them took from it, one they have mentioned since to other family members considering a similar sale, is that a number agreed on before anyone looks closely at the business is a starting point for disappointment, not a plan.

What you can learn from this