The buyer who pays most can see what you can't: why one business has three different prices

Most owners value their business the same way: take trailing earnings, apply the multiple they have heard a comparable fetched, and treat the answer as the price. It feels rigorous. It is also a description of what the business is worth to them, which is rarely what anyone else will pay.

The same natural health or skincare brand will be worth three quite different amounts to three different buyers, and the spread between them is often larger than anything an owner could achieve by improving margins for a year. The task is not to defend one number. It is to find the buyer for whom the business is cheap.

A financial buyer pays for headroom. A fund or family office looks at your earnings, your growth and the work left undone, and prices the business on what it can earn on a standalone basis. Its ceiling is set by its own cost of capital and its need to exit again. This is a perfectly good buyer, and often the right first one, but it is the buyer least able to pay for things that only exist inside someone else's company.

A domestic strategic pays for overlap. A local competitor or trade player can see the shared warehouse, the duplicated back office and the retail ranges it already holds. Those savings are real, but the buyer knows you are one of a short list of local options, and in a market this size that knowledge shapes the negotiation. It also tends to want a discount for the customers it expects to lose when two similar brands merge.

An offshore strategic pays for what it cannot build quickly. This is the buyer that matters most and is the one founders meet least often. A group with strong distribution in North America or Asia but no credible presence in New Zealand or Australian natural health is not buying your earnings. It is buying the years it would otherwise spend developing a formulation, earning a regulatory standing, building a quality story and winning shelf space. Your business is an acquisition that replaces a development programme, and the value of that programme to them has little to do with your multiple.

The right price is not the highest multiple in the market. It is what the business is worth to the one buyer who can use it best.

Why owners miss this. They look for buyers they already know. The people who see the business most clearly from the outside rarely call, because they cannot tell whether it is for sale and a polite approach to a founder who has not decided costs them more than it gains. So the owner's view of the market is built from the buyers who happen to be visible, not the ones who would pay most.

What changes the price. We would look at four things before any process starts. Which categories and channels a buyer would have to spend years building and you already hold. Which of your assets are transferable, meaning registrations, formulations, supplier relationships and data, as opposed to merely yours. How dependent the business is on the founder, since a strategic buys the company and not the person. And whether your evidence, quality and claims record would pass the scrutiny of a larger buyer's regulatory team. A business can be excellent on all of that and still be priced as though it were a standalone earnings stream, simply because nobody explained the alternative to the owner.

The practical point. Valuation is not a calculation you finish before you meet buyers. It is the result of who you meet. A process that talks only to one kind of buyer will produce one kind of price, and an owner who has not seen the others cannot know what was left on the table. If you suspect your business is being measured by the wrong yardstick, that is a conversation worth having before you speak to anyone, not after an offer arrives.

If you are considering your options, we are glad to talk in confidence. You can also have these notes sent to you by email.