Your Business Is Worth Less Than You Think: The 7 Discounts Buyers Never Tell You About

By Bill Anderson, FCCA, Chief Executive Officer, Assetica · Published 2026-06-05

Direct Answer: Buyers in the UAE routinely apply seven discounts before making an offer: owner dependence, customer concentration, marketability, earnings quality, working capital, size and deal structure. Together they explain why offers often come in 30 to 50 per cent below an owner's expected number. Every one of them is at least partly within your control if you start early enough.

Ask ten business owners what their company is worth and most will give you a number built on hope. Ask the buyer sitting across the table and you will get a very different figure, often 30 to 50 per cent lower. The gap is rarely about the buyer being cheap. It is about a set of discounts that buyers and their advisers apply as a matter of routine, and almost never explain.

We see this play out constantly in valuation work across the UAE. An owner arrives with a number in mind, usually based on a multiple they heard at a dinner or a headline they read about a competitor's exit. Then the offers come in lower, and the owner assumes the market is wrong. The market is not wrong. The owner simply never saw the deductions.

Here are the seven discounts buyers apply in practice, why each one exists, and what you can do about them. None of this is theory. Every one of these shows up in real negotiations, and every one of them is at least partly within your control if you start early enough.

1. The owner dependence discount

This is the biggest and most common. If the business cannot run for three months without you, the buyer is not buying a business. They are buying a job, and one that comes with the risk that the most important employee (you) walks out the door on completion day.

The signs buyers look for are simple. Are you the main point of contact for the top clients? Do supplier relationships sit with you personally? Does pricing, hiring and approval of anything meaningful route through your phone? In the UAE this problem is amplified by how many SMEs are built around a founder's personal network, and by visa and licensing structures where the owner is legally woven into the operation.

The discount can be brutal. A heavily owner-dependent business may trade at half the multiple of an equivalent business with a functioning second tier of management. Buyers also protect themselves with earn-outs and long handover periods, which means you do not just get less money, you get it later and with conditions attached.

The defence: start removing yourself at least two years before any sale. Document processes, push client relationships down to managers, and prove the business runs without you by actually taking a long holiday and showing the numbers held up.

2. The customer concentration discount

If one client represents 40 per cent of your revenue, the buyer does not see a strong relationship. They see a single point of failure. The question they ask themselves is blunt: what happens to my investment if that client leaves six months after I buy?

Concentration discounts kick in earlier than most owners expect. As a rough rule of thumb used widely in deal work, buyers start getting nervous when any single customer exceeds 15 to 20 per cent of revenue, and the discount deepens sharply above that. In sectors like contracting, facilities management and government-linked services, where one anchor contract often built the whole company, this is the discount that hurts the most.

It is not only customers. Supplier concentration, reliance on a single distribution agreement, or revenue tied to one landlord or one mall can attract the same treatment.

The defence: track concentration as a KPI, not just revenue. Winning a new mid-sized client is sometimes worth more to your eventual sale price than growing your biggest account, even if the revenue figure looks identical.

3. The marketability discount

Shares in a private UAE company are not like shares in a listed business. You cannot sell them in an afternoon. Finding a buyer takes months, due diligence takes more months, and the pool of credible buyers for any specific private business is small.

Valuers call this the discount for lack of marketability, and it is a standard, well-documented concept in valuation practice globally. The harder your business is to sell, the larger this discount becomes. Niche licences, complicated shareholding structures, free zone restrictions on activity or ownership transfer, and businesses that only make sense in one specific location all reduce marketability.

Owners almost never price this in, because from the inside the business feels obviously valuable. The buyer is pricing the question of who they could sell it to later, and how painful that process would be.

The defence: clean structure sells. Simple shareholding, transferable licences, premises leases that can be assigned, and contracts that survive a change of ownership all narrow this discount. Much of it is administrative work you can do long before a sale.

4. The earnings quality discount

Your profit figure and the buyer's profit figure are not the same number. Buyers and their accountants rebuild your earnings from scratch, and the rebuilt figure is almost always lower.

The usual adjustments: an arm's length salary for the owner gets inserted even if you never paid yourself one. Family members on the payroll at above-market rates get normalised. One-off gains get stripped out. Personal expenses running through the company get removed, which sounds like it should help you, but it also tells the buyer your books are not clean, and messy books attract their own discount. Cash revenue that does not appear in the accounts is worth nothing in a sale, no matter how real it is.

This discount compounds, because the multiple is applied to the adjusted earnings figure. Knock 20 per cent off the earnings and you have knocked 20 per cent off the price before any negotiation has even started.

The defence: run the business clean for at least two full financial years before selling. Audited accounts, owner salary at market rate, no personal expenses, and revenue fully captured. Every dirham of profit you can prove is worth a multiple of itself.

5. The working capital adjustment

This is the discount that surprises owners most because it arrives late, after the headline price is agreed. Almost every deal is priced on the assumption that the business comes with a normal level of working capital: enough receivables, inventory and cash to keep operating without the buyer injecting money on day one.

If your working capital is below the agreed normal level at completion, the difference comes off the price, dirham for dirham. Owners who strip cash out before the sale, stretch suppliers, or let receivables balloon discover that the headline number quietly shrinks at completion.

In the UAE, where payment terms in some sectors run long and receivables ageing is a chronic issue, this adjustment regularly takes meaningful value off deals.

The defence: understand what a normal working capital level looks like for your business and manage to it for the year before sale. Collect old receivables early, because a buyer will heavily discount or simply exclude anything seriously aged.

6. The size discount

Two businesses in the same sector with the same margins do not get the same multiple if one makes ten times the profit of the other. Smaller businesses carry more risk: thinner management, less negotiating power, more vulnerability to a single bad year. The market prices that risk through lower multiples, and the effect is well established in transaction data globally.

This feels unfair to owners of small, well-run companies, and in a sense it is. But it also points to one of the most reliable ways to increase value: crossing size thresholds changes which buyers can look at you at all. Private equity funds, regional strategics and institutional buyers each have minimum sizes below which they will not engage, and the moment you cross into a new buyer pool, competition for your business increases.

The defence: if you are close to a meaningful size threshold, it is often worth delaying a sale to grow through it, or considering a merger with a peer before going to market. Sometimes one plus one genuinely equals three in exit value.

7. The structure discount

The final discount is hidden inside the deal terms rather than the price. Two offers of AED 10 million are not equal if one is cash at completion and the other is AED 4 million upfront with the rest spread over three years of earn-outs tied to targets you no longer fully control.

Earn-outs, deferred payments, vendor financing and warranty holdbacks all transfer risk from the buyer back to you. The riskier the buyer perceives the business, often because of discounts one to six above, the more of the price they will push into contingent structures. A meaningful share of earn-outs are never paid in full, sometimes for legitimate performance reasons, sometimes because the buyer ran the business differently after taking over.

The defence: value offers on a risk-adjusted basis, not the headline. A lower all-cash offer frequently beats a higher structured one. And recognise that everything you do to reduce the first six discounts also reduces this one, because confident buyers pay upfront.

The pattern behind all seven

Look at the list again and a pattern emerges. Every discount is, at its core, the buyer pricing a risk that you have lived with so long you stopped seeing it. Owner dependence, concentration, messy books, thin working capital: these feel normal from the inside. From the outside, each one is a reason to pay less.

That is also the good news. Unlike market conditions or sector multiples, these discounts are largely within your control. The owners who get the best exits are rarely the ones who negotiated hardest at the end. They are the ones who started dismantling these discounts two or three years before they ever spoke to a buyer.

If you are even loosely considering a sale in the next five years, the most valuable thing you can do this year is get an honest, independent view of which of these seven discounts currently apply to your business, and how much each one is costing you. It is far cheaper to fix them now than to concede them across a negotiating table.

This article is general information, not advice on any specific transaction. Discount levels vary by sector, size and deal conditions, and any figures mentioned are indicative ranges drawn from common valuation practice rather than guarantees of outcome.

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