Every deal starts with a number. Enterprise value gets the headline, the champagne, the LinkedIn post. But the number on the term sheet and the outcome that actually lands in your bank account, your role, and your next decade are two very different things — and the distance between them gets decided by three factors that rarely make it into the first conversation: whether the numbers hold up, whether the business earns real buyer confidence, and whether the deal actually closes the way it was drawn up.

Here’s what determines each one.

Step One: Trust the Numbers

Every financial due diligence process comes down to a single underlying question: if an independent third party ran this business tomorrow, what expenses would they not need — or need to add — to see what profits and margins it’s really generating? Three questions tend to answer that faster than anything else.

• Accrual accounting, or cash? If you’re selling, buyers will model your business from an accrual bookkeeping perspective, because it’s the only view that shows earned revenue, actual expenses, true gross margins, and real performance trends. If you’re buying, assume most sellers are still working from cash-basis financials — reviewing them thoroughly before you frame an offer will save time and tell you exactly how much diligence work stands between you and a credible LOI.
• Books closed monthly, or “eventually”? For sellers, a slow close signals risk before a buyer even has to ask about it. For buyers, delayed financials are an early preview of what quality of earnings, integration, and post-close reporting are actually going to feel like.
• Personal expenses fully separated from the business, or still running through it? For sellers, every dollar that can’t be cleanly separated becomes harder to defend later. For buyers, every unclear add-back becomes one more question mark on the quality of earnings.

Try this today: Pull the last twelve months of financials in accrual format. If you’re selling, compare that to your cash-format numbers and list every adjustment you’d need for non-recurring costs, non-operating costs, and discretionary expenses before you fully believe in the EBITDA line you’ve built. Every adjustment should be well documented, clearly non-recurring or removable, and able to survive real buyer scrutiny.

Step Two: Know What the Risk Factors Really Say

Not every acquisition gets evaluated the same way, but serious buyers keep coming back to the same core question: how much confidence do we have that this business can perform after the close? We see the answer play out in dozens of vetted buyer and seller conversations every month, matching mandates with qualified opportunities across companies from $8M to more than $100M in revenue, plus PE firms building platform investments — and the same risk factors surface again and again.

For sellers, these factors shape value, structure, and certainty of proceeds. For buyers, they shape price, protection, integration planning, and how much risk they’re actually underwriting. If you’re building toward a sale, these are the levers worth strengthening before the market assigns you a number. If you’re evaluating a target, they’re the same signals worth testing.

The strongest risk mitigators we see:

• 65%+ recurring revenue, with evergreen contracts that have no easy outs before at least one year, and annual price increase minimums
• Free cash flow above $500K for most sellers — very large buyers typically want more than $1.5M, representing 15%+ of revenue
• 90%+ customer retention, with net MRR retention over 100%
• Operational continuity — leadership, systems, and processes that can keep performing through a transition
• Sustainable revenue generation, with sales and marketing functions built to perform beyond the transaction itself
• Organic growth in the 8–12% range, with no single customer above 10% of revenue in any bucket

Try this today: Pick the factor on that list furthest from where your business sits right now. For sellers, improving it will likely increase value, simplify structure, and improve certainty of close. For buyers, understanding it can modify price, enhance protections, and refine post-close expectations.

Step Three: The Proof Is in Who Actually Closes

Once terms are agreed, the real work starts. Financing gets scrutinized, diligence gets sharper, and confidence on one side or the other can quietly shift. Across the industry, roughly 50–60% of signed LOIs actually make it to a closing table.

Cogent’s historical close rates speak for themselves: 87% for buy-side engagements and 82% for sell-side engagements that reach a signed LOI. Across more than 200 transactions, that advantage reflects more than process — it reflects Acquisition Intelligence™, earned from decades of experience and supported by today’s best tools, helping us recognize when a deal is genuinely right for both sides after a good deal of Transaction Therapy™ along the way.

Knowing the difference helps both parties work through the inevitable pressure of the final stretch without losing sight of why the transaction made sense in the first place. Here’s what that looks like across real transactions — similar revenue ranges, very different paths to close, because the price on the term sheet was never the whole story:

None of these structures came from a formula. Each one reflects what that specific buyer could underwrite with confidence, and what that specific seller needed to preserve value and move forward.

Try this today: For sellers, that means understanding Total Enterprise Value, cash at close, rollover equity (if any), a seller note (if any), earnouts in whatever form they take, taxes, deal timeline, and the certainty of proceeds. For buyers, it means having the cash required, accepting the risk retained, and being clear on performance assumptions, integration obligations, and what has to happen after close to realize the modeled return over time.

The Number Was Never the Whole Story

Enterprise value gets you to the table. Trust in the numbers, confidence in the risk factors, and a structure built for the specific people on both sides of the deal are what actually get you to close — and to an outcome you’re glad you signed up for.

Cogent Growth Partners has spent nearly two decades focused exclusively on IT Services M&A, guiding ITSPs, MSPs, CSPs, and cybersecurity firms through exactly these decisions. That experience is what Acquisition Intelligence™ is built on, and Transaction Therapy™ is how we carry it through the pressure of a live deal — from the first exploratory conversation to the final signature.

Whether you’re exploring your options or already preparing for a transaction, connect with our team for a confidential conversation about what would actually move your numbers, your risk profile, and your close rate.