The Five Numbers Every Acquirer Will Ask About Your Business

I have sat on both sides of GCC M&A tables for the better part of a decade — advising owner-managed groups going to market, and helping acquirers pull apart the businesses they are looking at. The single most consistent observation across every transaction I have worked on is this: by the second meeting, the acquirer has reduced your entire business to five numbers. If those five numbers are credible, the conversation moves to price. If any one of them is fragile, the conversation moves to discount, escrow, or walk-away.

Founders typically prepare for due diligence by tidying contracts and updating the org chart. That is necessary, but it is not the work that decides the outcome. The work that decides the outcome is making sure these five numbers are not just available but defensible — calculated the right way, traceable to source, and consistent across every document the acquirer sees.

Number one: Normalised EBITDA

The most important number in the entire transaction, and the one most often handled badly by sellers.

Reported EBITDA from your audited financials is almost never the number a buyer will pay against. Acquirers want normalised EBITDA — the underlying earning power of the business, stripped of one-offs, owner-specific costs, and accounting choices that won't survive the change of ownership. In owner-managed GCC groups, the gap between reported and normalised is rarely small. I have personally walked clients through normalisations that lifted EBITDA by 25 to 40 percent, and others that brought it down by 15 percent because management had been quietly capitalising things that were really operating expenses.

The adjustments that come up almost every time in the Gulf:

• Owner compensation above or below market — a founder taking SAR 80,000 a month in salary plus dividends needs to be benchmarked against what a hired CEO would cost.
• Related-party rent on properties owned by the family, often booked at 30-50% above or below market depending on the group's tax and zakat strategy.
• Personal expenses run through the business — vehicles, travel, household staff, school fees in some cases. Buyers will find these. It is far better to surface them yourself.
• One-off project gains and losses, particularly in contracting businesses where a single large job can swing a year's earnings by several million riyals.
• Intercompany transactions that net to zero at group level but distort entity-level performance.
• Provisions and write-backs — especially Expected Credit Loss adjustments under IFRS 9 that have been managed to smooth earnings.

Number two: Quality of revenue

Revenue is not a single number to a sophisticated buyer. It is a structure. The question they are really asking is: how much of next year's revenue is already locked in, how much of it depends on you personally, and how much of it could walk out the door the day the deal closes?

I run revenue through four lenses for every client preparing for a transaction.

1. 01Recurring vs. transactional split — what percentage of revenue comes from contracts, retainers, framework agreements, or repeat customers behaving as if they were on contract?
2. 02Customer concentration — top 5 and top 10 customer revenue as a percentage of total. Anything above 40% in the top 5 will trigger a discount unless there are multi-year contracts behind it.
3. 03Customer tenure — average length of relationship for top customers, and churn rate for the rest. A trading business where the top 10 customers have been with you for 8+ years is a fundamentally different asset to one where they have rotated every two years.
4. 04Pricing power — have you been able to push price increases through in the last three years, or has gross margin compressed silently?

I worked with an industrial services group in Jubail last year where reported revenue was SAR 180 million and the founder genuinely believed the business was diversified. When we ran the analysis, two Aramco contractors accounted for 61% of revenue, and one of them was on a contract that expired six months after the proposed close. The deal still happened — but at a structure with 30% of consideration deferred and contingent on contract renewal, rather than the all-cash exit the owner had expected.

Number three: Working-capital intensity

This is the number that catches GCC owners off guard more than any other, because it doesn't appear on the P&L. Working-capital intensity is how much cash your business needs tied up in receivables, inventory and payables to generate one riyal of revenue. Buyers care about it for two reasons: it determines how much cash they need to inject post-close, and it directly affects the closing-mechanism debate that will dominate the final two weeks of every transaction.

The relevant metrics are debtor days, inventory days, and creditor days, combined into a cash conversion cycle. In owner-managed Gulf businesses, I typically see:

• Trading and distribution: 60-110 day cash conversion cycles, often hiding aged stock that should have been written down years ago.
• Contracting: highly variable depending on retention practices, with debtor days frequently above 180 once retention is included properly.
• Industrial services: 45-90 days, with creditor days that have crept up because the business is using suppliers as a cheap line of credit.
• Manufacturing: 70-120 days, often distorted by inventory carried at standard cost rather than realisable value.

The buyer will set a normalised working-capital target — the amount they expect to be inside the business at closing. Anything below that target reduces the consideration paid. I have seen otherwise straightforward deals lose SAR 8-12 million of headline price in the working-capital negotiation alone, because the seller hadn't analysed their own cycle and arrived at the table without a defensible number.

Number four: Debt service coverage and facility structure

When a buyer looks at your balance sheet, they are not just adding up the debt. They are asking three things: is the debt sustainable at current EBITDA, will the lenders consent to a change of control, and what does the facility structure tell us about how the business has been managed?

Debt service coverage ratio (DSCR) — EBITDA divided by total debt service for the period — is the cleanest summary. Below 1.5x and the buyer will assume the business has been running close to the wire. Below 1.2x and they will assume you are about to need a covenant waiver. The other ratio that matters is net debt to EBITDA. In the Gulf, owner-managed groups operating at 3.5x or higher are common, but anything above that is a flag for buyers, not just because of the leverage but because of what it suggests about the relationship with the lenders.

Beyond the ratios, buyers want to see facility structure. Are short-term working-capital lines being used to fund long-term assets? Are personal guarantees from the owner load-bearing in the structure — meaning they will need to be replaced or refinanced at completion? Are there cross-default clauses across multiple banks that complicate the change-of-control process? In one Bahraini transaction I worked on, the seller had eleven facilities across five banks, three of which had cross-default and two of which required formal lender consent for any change in shareholding above 25%. The diligence work to navigate that took six weeks and very nearly killed the deal.

Number five: Capex run-rate and maintenance vs. growth

The fifth number is the one most often ignored by sellers, and the one private equity buyers obsess over. It is the split between maintenance capex and growth capex.

Maintenance capex is what you must spend every year to keep the business operating at its current capacity — replacing trucks, refurbishing equipment, refreshing IT, maintaining facilities. Growth capex is what you choose to spend to expand. Most owner-managed businesses in the GCC report a single capex line and have no analysis of the split. Buyers care because maintenance capex is a real economic cost that should be deducted from EBITDA to arrive at free cash flow, while growth capex is a discretionary investment they may or may not continue.

If you can't tell a buyer what your annual maintenance capex is, they will assume the worst — and they will deduct accordingly when they value the business. I typically build a five-year capex history with each line item categorised, and a forward-looking maintenance capex schedule built from the asset register. That work takes two to three weeks and routinely defends SAR 5-15 million of valuation in the businesses I take to market.

"Acquirers don't pay for what your business is. They pay for what they believe your business will reliably do for them next year. Those five numbers are the entire content of that belief."

Get the numbers right before the conversation, not during it

The pattern I see again and again is that owners go to market with a strong qualitative story and weak quantitative preparation. The acquirer's analysts then spend the first six weeks of the process effectively rebuilding these five numbers from scratch — and every gap they discover, every adjustment they make, becomes a reason to lower the price or restructure the consideration.

If you control these five numbers before you walk into the first meeting — calculated cleanly, supported by source documents, presented in a coherent narrative — you change the dynamic of the entire process. The buyer's diligence becomes confirmation rather than discovery. The price you discussed in the first meeting becomes the price you sign at.

At Aontas Advisory I work with owners across the Gulf in the 6 to 18 months before they go to market, getting these five numbers into the shape they need to be in. Whether you are responding to an unsolicited approach, planning a structured exit, or bringing in growth capital, the preparation work is what determines outcome. You can find more on how we work alongside owners in this position on our Fractional Executive Services page.