Day 2 – Breakout Session 6 – 11:15-11:45 AM
Room: Wildfire
Two Businesses Walk Into the Room. Only One Gets Bought.
Don Bielen & Forrest Wardick, Capital Eleven Advisors · RizeCon 2026 · Pocatello
Two businesses. Same age, same products, same revenue at $30 million, same earnings at $3 million, same growth trajectory. One sells for just over $10 million. The other sells for nearly $20 million. Same company, roughly, on paper — but 2X the valuation in practice. Don Bielen and Forrest Wardick from Capital Eleven Advisors opened with that scenario and spent the session explaining why the gap exists, what drives it, and what business owners can start doing now to land on the right side of it.
The distinction that frames everything: there are businesses that get sold, and businesses that get bought. When you’re sold, the buyer has the advantage — they’re process-driven professionals who have acquired multiple companies before, with teams, metrics, and valuations at the ready. When you’re bought, you have the advantage — there’s competitive tension, you’re negotiating price and terms, and multiple buyers are competing for you. Most sellers don’t know which category they’re in. The buyers always do.
What they covered
Seven key valuation drivers. Forrest walked through the factors that separate the $10 million company from the $20 million company in their opening scenario. These aren’t the only factors, but they’re the most consistent ones across industries and transaction types.
Revenue concentration. If 60% of revenue is tied to a single customer or project, buyers face serious underwriting challenges — and so do their lenders. Even a strategic buyer who’s comfortable with the risk may find the deal fall apart when their bank tries to finance it with an SBA loan. Diversified revenue streams reduce risk in the eyes of everyone touching the transaction.
Revenue quality. Contracted, recurring revenue commands a premium over project-based, one-off revenue. Financial sponsors diligence churn extensively — both logo retention and whether existing customers are spending less over time. The difference between a services business with retainer agreements and one with no contractual binding is substantial, even if the revenue numbers look identical.
Margin durability. Forrest described two types of companies: the kite that moves with every wind, and the plane that coasts through regardless of weather. When margins swing up and down based on project mix or vendor relationships, buyers apply a discount — even if the underlying business is healthy. Worse, when companies grow revenue at the cost of margin compression, sophisticated buyers don’t honor that growth. They discount it. The best position: growing revenue while margins hold or expand.
Financial hygiene. Don called this the gating event — the one that, if failed, stops everything else from mattering. Most lower middle market businesses have unprofessionalized financial statements. They think they’re running on accrual because their QuickBooks is set up that way, but they’re not recognizing revenue and costs at completion, which makes margins look lumpy when the underlying business is actually quite stable. GAAP-compliant accrual accounting and a CPA-stamped EBITDA adjustment aren’t typical for sell-side clients — but Capital Eleven emphasizes them strongly, because if your EBITDA is $1.5 million and the buyer’s diligence team comes back with $750,000, the conversation is essentially over.
Owner dependency. The business where the owner is the business — where customers know the founder’s name more than the brand — is significantly discounted against one that’s systematized and scalable. In relationship-driven industries like general contracting, buyers will diligence exactly who those relationships are tied to, and if the answer is the departing owner, expect earn-outs, holdbacks, and seller notes that extend the deal terms for years. The goal is building a brand that the market knows, not a business that runs on one person.
Quality of growth. Two companies that both grew 5% last year may have grown very differently. One got there by losing customers, making price concessions, and landing one large replacement client — introducing revenue concentration on top of churn. The other increased prices and held them, grew organically within its existing base, and has zero churn. Financial sponsors look deeply at price-volume mix: is growth coming from real demand, or a race to the bottom on price?
Operational maturity. The catch-all for systematization, technology, and process. When a business runs on tribal knowledge — where nothing is documented, operations depend on specific people rather than repeatable systems, and technology is outdated — buyers apply a significant discount. The analogy Forrest offered: building yourself to be bought is like targeting specific universities instead of applying broadly. If you know buyers in your industry care about best-in-class tech and systematization, invest in those things now. They’ll show up in your multiple.
Why LOIs fail. Getting to a letter of intent is roughly the 50-yard line — not the finish line. Don walked through the two main failure modes after LOI. About 25% of deals fail on non-quality-of-earnings diligence issues: a lease that can be terminated with 60 days’ notice by a railroad company that owns the land, contracts that aren’t transferable on sale, patents expiring in two years across eight key products. These aren’t financial problems — they’re structural ones that buyers find and price accordingly. The other failure mode is quality-of-earnings surprises: owner compensation below market, rent not at market rates, personal expenses backed out that are actually required for operations. Don’s line on this: surprises are great for birthdays and Christmas, but not during due diligence.
What attendees got
Capital Eleven Advisors offered to send the full slide deck to any attendee who emails Don or Forrest directly, and extended an open invitation for one-on-one conversations about enterprise value assessment and exit positioning. Their strategic advisory service does exactly what the session covered: a full value driver assessment identifying what a company is doing well and what needs to change before taking it to market — with the explicit goal of moving a company from the “sold” category to the “bought” category before it ever goes live.
One story that landed
The team was ready to take a company to market in December. Revenue had grown 30–35% annually, the customer base looked strong, and geographic diversification was showing. They created the buyer list, drafted the teaser and CIM, started conversations with financial and strategic buyers. Then they looked closely at the general ledger. The company had been fueling its growth entirely through overtime — operating margins and net income margins were getting seriously compressed. Don pulled the deal. They diagnosed operational issues, a COO leadership problem, and an IT stack that wasn’t competitive. He told the client directly: we are not ready. They went back to work on the business. That willingness to stop, diagnose, and fix rather than push a vulnerable company to market is, Don said, exactly what the difference looks like between a $10 million outcome and a $20 million one.
“Surprises are great for birthdays and Christmas, but they’re not great when you’re in due diligence.” — Don Bielen
“The whole point of everything we’re talking about today is: what do we do to reduce risk, drive multiples, and increase salability?” — Don Bielen
About the speakers
Don Bielen is a co-founder at Capital Eleven Advisors, a middle-market M&A advisory firm based in Boise, Idaho, currently working with clients across five states. He focuses on sell-side M&A, strategic advisory, and helping business owners understand and improve their enterprise value before going to market. Forrest Wardick is Capital Eleven’s Senior Financial Analyst, focused on valuation analysis, quality-of-earnings work, and the financial diligence process that determines how deals are structured and priced.