Every deal has two sides. Getting to the finish line requires both of them to be working from the same playbook, and more often than not, they aren't.

Meet Mike. He's spent 10 years building his HVAC business from the ground up. He has a team of 10 people he's close with, deep knowledge of his industry, and a clear sense of what a decade of hard work is worth. He wants to maximize what he walks away with, and he wants to know his business and his team will be taken care of after he's gone.

Meet Brandon. He spent years in corporate finance and is ready to trade a salary for ownership. He's looking for a recession-proof business he can run with his management skills and financial acumen, but he also needs the numbers to work. He can't overpay and leave himself undercapitalized before the business even starts generating returns for him.

Brandon and Mike shake hands at a number, sign an LOI, and enter diligence feeling good. Then, somewhere around week six, a question comes up about the financials, or the deal structure, or what "working capital" actually means, and suddenly both sides feel like the other one moved the goalposts.

These are the areas where expectations diverge most often, why it happens, and what both sides need to understand before they get to the table.

Valuation

This is where the gap starts, and it's the most emotionally loaded one.

Buyers price businesses on future cash flow. Sellers often price them on past sacrifice. The two calculations start from different places and arrive at different numbers.

The seller’s perspective

The seller looks at years of revenue, a built-out team, a loyal customer base and prices accordingly. That track record is real, but valuation is based on normalized, sustainable earnings, not peaks or outliers.

A record year is a great signal, but buyers and lenders need to see 18–24 months of earnings sustained at that level before they'll price it in. A down year doesn't get looked past either. If the business can't service acquisition debt at current earnings, the old valuation simply doesn't apply anymore.

The buyer’s perspective

The buyer looks at what the business will produce, discounted for the risk they're now taking on. They're buying a future income stream, and they're the ones who have to deliver it. Every uncertainty about customer retention, key-person dependency, or market conditions gets priced into their number as risk. The more unknowns, the lower they're willing to go.

How to bridge the gap

So how do you find a number both sides can stand behind?

There isn't one single answer, but adjusted EBITDA is usually the foundation. It answers the question both buyers and lenders care most about: what will this business reliably earn every year, once the noise is stripped out? It creates comparability across businesses in the same industry and gives both sides a shared starting point instead of two separate ones.

The catch is that adjusted EBITDA is easy to manipulate. Some sellers treat it like a cleanup pass, adding back anything they'd rather a buyer not see. 

Know that this approach tends to backfire. Over-adjusting recurring costs as "one-time" expenses, burying personal perks in business line items, or making add-backs that don't hold up under scrutiny will surface in diligence and erode trust at exactly the moment you need it most. Clean books with honest adjustments will outperform inflated ones every time.

A professional valuation closes a lot of this gap. Not because it tells the seller they're wrong, but because it gives both sides a methodology they can point to. It takes the number off the emotional table and puts it on a technical one, which is where deals actually get done.

Financials

"Clean books" means something different to everyone at the table. That gap quietly derails more deals than almost anything else.

The seller's perspective

"Clean books" to a seller means taxes filed, accounts balanced, nothing to hide. 

The buyer's perspective

"Clean books" to a buyer means GAAP-compliant, accrual basis, reconciled, and defensible in a quality of earnings review. A buyer financing through an SBA lender or bringing in an outside accountant is working to an entirely different bar.

How to bridge the gap

Financial questions dominate buyer diligence, often because the records weren't organized to answer the questions buyers need to ask.

For sellers, get ahead of this before listing. Reconcile to accrual basis, separate personal and business expenses cleanly, and have three years of P&L and balance sheets ready. It's work that pays for itself in deal speed and negotiating position. And if you want a premium multiple, go further: clean financials are just the floor. Buyers paying 3.5x or more aren't buying a job; they're buying a low-friction income stream or clear strategic upside. That means delegated operations and a management structure that survives your exit.

For buyers, ask early. Don't wait 60 days into diligence to discover the books need work. Surface it in the first few conversations so you know what you're signing up for.

Financing and deal structure

This is where the most specific, expensive surprises live.

The seller's perspective

Sellers often enter the market hoping their business will attract a cash buyer, but fewer than 30% of buyers in the current SMB market are willing or able to pay all-cash. 

The other assumption that creates problems: that the cash and receivables sitting in the business are yours to take at close. Working capital isn't a bonus; it's part of the deal. Buyers expect to receive a normal operating level of working capital at close so they can run the business from day one. 

Attempting to sweep AR or delay AP before closing will blow the deal. Trying to sweep AR or delay AP before closing will backfire. Buyers will notice, it erodes trust, and you're unlikely to gain anything anyway—working capital adjustments to the purchase price are standard in these transactions.

The buyer's perspective

Most first-time buyers know they'll need financing, and many assume their SBA loan covers the purchase price. But it isn’t the full picture. Buyers need to fund professional fees and sometimes working capital upfront. Transition costs and a line of credit from the lender can reduce debt-capacity even further post-acquisition. 

How to bridge the gap

For buyers: Run the full cost of acquisition before you're in a deal, not during it. The purchase price is the starting point, not the finish line.

For sellers: Flexibility on structure is often what gets a deal done. A cash-only requirement isn't a dealbreaker, but it's a constraint that will cost you time and limit your options.

For both sides: The working capital peg (or at least the mechanism for it—the exact number will be uncovered in diligence), the negotiated baseline that defines how much working capital stays in the business at close, needs to be on the table at the LOI stage, not three weeks before closing. It's a solvable problem when raised early. It's a deal-killer when it isn't.

The myth of passive ownership

The seller's perspective

By exit, most sellers have built a business where key systems are in place, the team knows their roles, and the owner has stepped back from the day-to-day. What's harder to see from the inside is how much still flows through them: the relationships, the judgment calls, the presence that holds the operation together. 

Take Erik and Kass Hansen, who built Greenway Painting from the ground up. Their success was built on in-person customer relationships, showing up to jobs, and getting their hands dirty. That's not a system you can document in a transition binder.

The buyer's perspective

Many buyers come in looking for a business they can run remotely: something that generates cash flow while they focus on other things. But most small businesses aren't structured that way. They're location-based, serving local communities, often requiring someone physically present. 

In trades like HVAC, painting, or landscaping, you need to be boots on the ground. What makes the business work, the owner's relationships, instincts, and daily presence, doesn't transfer automatically at close.

How to bridge the gap

Every acquisition requires an active transition period. Systems need to be learned, relationships transferred, and decisions that were made on instinct for 15 years now need to be made consciously by someone who has been at it for 15 days.

For sellers, the more you systematize before exit, documented processes, delegated decision-making, strong middle management, the smoother the transition and the stronger your negotiating position.

For buyers, go in with eyes open: the first 90 days will require your full attention. If your plan is to hire an operator eventually, factor that cost in from the start. but understand that someone needs to be actively running the business at all times, whether that's you or a high-level manager you trust. 

Final thoughts: the common thread

Every one of these gaps has the same root cause: buyer and seller are using the same words to mean different things, and nobody surfaced the mismatch early enough to resolve it cleanly.

The deals that close well on Baton are the ones where both sides put their assumptions on the table before the LOI is signed, not after. That means sellers getting clear on what their business is actually worth by market standards, what their books look like to an outside buyer, and what deal structure they can realistically expect. It means buyers understanding the full cost of an acquisition, how deal structures actually work, and what active ownership looks like in year one.

The surprises aren't inevitable. They're just what happens when nobody asks the questions early enough.