Evidence is the new multiple: why two identical supplement brands no longer sell for the same price

Something has shifted in the natural health deal market over the last eighteen months, and it has not been widely noticed by the people it affects most. Acquirers have stopped paying primarily for distribution and started paying for defensibility. Two brands with the same revenue, the same margin and the same growth rate now trade at materially different multiples, and the gap is explained almost entirely by whether the claims on the pack can be substantiated.

The uncomfortable implication for a founder is this. The money spent on acquisition bought revenue. The money not spent on evidence set a ceiling on what that revenue is worth. One of those is recoverable in the eighteen months before a sale. The other is not.

What an acquirer is actually underwriting. A corporate buyer in this category is not really buying last year's sales. It is buying the right to keep making the claim that generated them, in more markets, at greater volume, under a brand with more to lose. That right is only as good as the evidence behind it. A regulator in New Zealand, Australia, the United States or Thailand can take a product off shelf, force a reformulation, or require a label change, and the buyer — not the seller — carries that risk from completion. So the diligence question is no longer "does it sell". It is "can we keep saying this, everywhere we intend to sell it, for as long as we intend to own it".

The buyer is not acquiring your revenue. It is acquiring the right to keep making the claim that produced it.

What counts as evidence, and what only looks like it. A great deal of what sits in founders' claims files does not survive contact with a competent reviewer. A study on a different extract, at a different dose, in a different population, is background literature — it is not evidence for your product. A trial on an ingredient at a concentration well above what your formulation actually delivers supports a claim you cannot make. A supplier's marketing dossier is a supplier's marketing dossier. What does count is work done on the material you actually sell, at the dose you actually use, with characterisation and a specification that tie the tested material to what comes out of your production run. That chain — from the study, to the specification, to the batch on the shelf — is what a buyer's technical reviewer is looking for, and it is where most files break.

Ownership is a separate question from existence. Founders are frequently surprised to discover in diligence that the evidence underpinning their lead product does not belong to them. The study was funded by the ingredient supplier and is licensed, not owned. The formulation sits with a contract manufacturer under an agreement that is silent on IP, or worse, clear that the manufacturer owns it. The extract is proprietary to someone else and available to any competitor who places an order. Each of these caps value, because what the buyer wanted — exclusive access to the thing that makes the claim defensible — is not on offer. Chain of title over the evidence is worth as much as the evidence itself.

The claims file is a diligence document, whether or not you wrote it as one. Every piece of copy on the pack, the website, the retailer listing and the influencer brief is a representation the buyer will inherit. Where those representations run ahead of what can be supported, they are not treated as an ambitious marketing tone. They are priced as a contingent liability, and contingent liabilities are discounted far more harshly than the revenue they generated was ever worth. We have seen a strong brand lose more value in the review of its own website than in any other part of a process.

The practical sequence. If a sale is two years out, the order of work is unglamorous and effective. Audit what is currently claimed, everywhere, and match each claim to the document that supports it. Retire the claims that have nothing behind them, quietly, before a buyer finds them. Fix the ownership questions — the manufacturing agreement, the supplier licence, the specification — while there is no transaction giving the other side leverage. Then, and only then, decide where new evidence would genuinely move the multiple rather than simply spend the budget. A single well-designed study on the actual finished product is usually worth more in a process than a shelf of adjacent literature.

Why this is a Cairns & Company view. We work across natural health, botanical ingredients and skincare in New Zealand, Australia, Thailand and the United States, and we are not scientists — we are the people who watch what happens to price when a technical reviewer opens the file. The pattern is consistent enough to plan around. Brands that treated evidence as a marketing cost get a multiple built on distribution. Brands that treated it as an asset get a multiple built on defensibility. In this market, that is not a small difference.

If you are two or three years from a sale and are not certain your claims file would survive a buyer's technical review, that is worth testing while there is still time to fix it. You can also have these notes sent to you by email.