InsightsValuation

The Valuation Gap: What Sellers Expect vs. What Buyers Pay

April 2026Charlotte Meyer5 min read

Across the mandates we have analysed, the average gap between an owner's initial value expectation and the eventual closing price is 28%. The uncomfortable finding is not the size of the gap — it is where it comes from. Very little of it is negotiation. Most of it is created years earlier, in decisions owners made without knowing they were pricing their company.

Where the gap is born

Three sources account for most of the difference. First, reference-point error: owners anchor on headline multiples from a different sector, size class or year. A "10× EBITDA" headline from a €2 billion software deal says nothing about a €30 million services company. Second, quality-of-earnings adjustments: private-company accounts flatter reality — owner compensation, one-offs and related-party arrangements are all re-underwritten by buyers, usually downward. Third, risk pricing: customer concentration, key-person dependency and weak reporting each shave turns off the multiple before negotiation even begins.

How owners close it

• Get a real valuation early. Not a flattering one — a defensible one. Knowing your true range two years out converts disappointment into a work plan.
• Fix what buyers price hardest. Reducing top-customer concentration from 40% to 25% typically adds more value than a year of profit growth.
• Control the narrative with data. A seller-commissioned quality-of-earnings review removes the buyer's favourite discount lever: uncertainty.

The honest conclusion

The valuation gap is not a market injustice; it is deferred information. Owners who acquire that information early — while there is still time to act on it — routinely close most of the 28%. Owners who first hear it from a buyer's due-diligence team pay it in full.