Why the Best Deals Aren’t Always the Highest Valuations

There is a moment early in every sell-side engagement when a business owner sees a range of valuations for the company they have spent years—often decades—building. The number is compelling. It feels definitive and objective, a clean summation of a long entrepreneurial journey. But after more than twenty-five years advising founders, families, and closely held enterprises, I’ve learned something that surprises nearly every first-time seller: the best deal is rarely the one with the highest headline price.

Across two decades and multiple industries—from industrial services to healthcare, consumer brands to technology-enabled businesses—we have selected the highest-price offer only about 40% of the time. Not because price is unimportant, but because valuation is only one variable in a negotiation defined by structure, timing, governance, behavioral dynamics, and post-transaction realities. A successful sale is ultimately judged not by the number on page one of a term sheet, but by the clarity, alignment, and stability it provides in the years that follow.

In middle-market transactions—particularly in founder-led companies across the Southwest—headline valuation is often the least reliable indicator of long-term satisfaction.

I. The Illusion of “Top Dollar”

Valuation is easy to anchor to because it is simple to compare. A business owner looks at two offers—one for $48 million, the other for $52 million—and instinctively concludes that the latter is stronger. But the moment you examine what stands behind each number, the comparison often shifts.

The higher valuation may assume:

·         materially lower cash at close,

·         aggressive earnouts dependent on future performance,

·         a working-capital peg designed to claw back value,

·         a capital structure that dilutes rollover equity, or

·         post-closing obligations that constrain the seller for years.

Price without context tells an incomplete story. Sophisticated buyers understand that valuation can be stretched, but structure determines real economics. Two identical numbers can lead to very different outcomes depending on how risk is allocated and how the process is managed.

A $52 million offer that delivers $38 million at closing and layers in contingent payments may be far less attractive than a $48 million offer that delivers certainty, simplicity, and a clean transition.

II. The Other Nineteen Variables Sellers Should Care About

When advising founders, I encourage them to view valuation as one input among many. A balanced evaluation incorporates the full landscape of economic, legal, operational, and cultural terms.

Key variables include:

·         deal structure (asset vs. stock),

·         cash at close versus contingent payments,

·         rollover equity and accompanying rights,

·         working-capital mechanisms and adjustment formulas,

·         indemnification caps and survival periods,

·         escrows and holdbacks,

·         employment agreements and compensation structure,

·         post-close roles and governance expectations,

·         non-compete and non-solicit covenants,

·         financing certainty,

·         board composition and minority protections,

·         treatment of key employees and family members,

·         integration plans and cultural compatibility,

·         regulatory considerations,

·         timeline and certainty of closing.

Any one of these variables can shift actual proceeds by millions of dollars. Together, they determine whether a seller’s next chapter is defined by clarity or complexity.

III. Structure: The Silent Dealmaker (or Dealbreaker)

In working with families through generational transitions for over two decades, I have seen how structure quietly determines real value. That principle is even more pronounced in today’s competitive private markets.

Two offers may both say “$50 million,” but their structures may differ dramatically:

·         One delivers 80% cash at closing.

·         The other ties 40% to multi-year earnouts, includes a large escrow, and places disproportionate risk on the seller.

On paper, the offers look comparable. In practice, they are not. Owners focused on retirement, diversification, or stability often benefit more from terms emphasizing certainty than theoretical upside.

Structure is where economics are made or lost.

IV. Timing and Certainty: Underrated Drivers of Real Value

The highest valuation means little if the deal does not close—or requires nine months of friction to get there. Momentum, responsiveness, and the buyer’s ability to maintain discipline during diligence all influence outcomes.

In founder-led companies, especially those rooted in Arizona’s manufacturing, consumer, and industrial sectors, extended timelines come with real cost: management distraction, employee uncertainty, and operational drift.

A slightly lower valuation that closes efficiently can outperform a higher valuation entangled in shifting conditions or disjointed diligence.

V. The Variable That Often Outweighs Them All: Buyer Personality

Across hundreds of engagements, one factor has consistently influenced outcomes: the personality and behavior of the buyer.

Personality shapes how a buyer:

·         negotiates,

·         handles unforeseen issues,

·         treats people,

·         behaves under pressure,

·         communicates when challenges arise,

·         and collaborates during integration.

Some of the strongest headline valuations we have seen were ultimately passed over because the buyer’s temperament suggested future conflict—rigidity, lack of preparation, or an adversarial posture. Conversely, some of the best long-term results came from buyers whose approach was straightforward and constructive, even when their valuation was not the highest.

In the Southwest, where many companies carry deep cultural and community ties, personality fit often correlates with smoother diligence, fewer surprises, and clearer transitions.

VI. The Long Tail of a Deal

Founders often think of a sale as a single moment. In reality, it is a sequence of interdependent stages—preparation, buyer selection, diligence, documentation, closing, and post-transaction handoff.

The right deal is the one that allows a seller to move through the full sequence with:

·         a clear understanding of obligations,

·         a practical transition plan,

·         alignment between buyer and management,

·         and confidence that employees and customers will be well served.

The closing wire transfer marks a transition point, not the conclusion. The experience that follows depends heavily on the structure and on the buyer’s conduct throughout the process.

VII. What an Advisor’s Role Really Is

At William & Wall, our role is not to always chase the highest valuation—it is to help founders navigate the full ecosystem of a transaction: economics, structure, timing, personality fit, and cultural alignment.

When we meet with a seller, our first questions are rarely about price. They center on objectives:

·         Do you want to continue in a leadership role or step back?

·         How important is employee continuity?

·         What level of risk are you willing to retain?

·         Which buyer’s approach fits your expectations?

·         How do you want the company to transition after your involvement?

Clear answers to these and other questions often shape the path forward more directly than the valuation range itself.

Conclusion

The highest number is rarely the whole answer. In middle-market transactions—especially for founder-led companies—the quality of terms, the behavior of the counterparty, and the alignment around transition often matter far more than headline price.

A strong outcome is one built on structure, clarity, and the right buyer—not simply the largest figure on a term sheet.

At William & Wall, we help business owners execute with both urgency and accuracy. Based in Scottsdale, Arizona and serving clients across the U.S., our firm specializes in lower middle market M&A—guiding sellers from readiness to close with discipline, discretion, and relentless focus on value.

If you’re considering a sale in the next 12–24 months, now is the time to prepare. Because in M&A, the winners are those who can move fast—because they’ve prepared well.

💡 Take the first step toward a confidential conversation and contact William & Wall today for expert sell-side M&A advisory and investment banking guidance for middle-market business owners.