PE Buyers Use Benchmarking to Negotiate Lower Prices

Private equity acquirers compare target company financials against proprietary benchmarks, using any gaps to negotiate lower purchase prices. This underscores the importance of accurate financial reporting for sellers.

“The math is unforgiving: buyers work line by line through a target company’s P&L, comparing it against a proprietary set of industry benchmarks, and any gap between a business’s actual performance and that benchmark becomes leverage in a negotiation, or a number that gets quietly built into a lower purchase price.”

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