“The day that the business no longer needs the owner is the day that business goes up in value exponentially.” –Tom Bronson
That was one of the clearest messages Tom Bronson delivered during “M&A Playbook for VARs & ISVs: A Practical Guide to Buying and Selling” at RetailNOW 2026 in Las Vegas. It also explains why M&A preparation should matter to owners who are years away from selling – or who may never sell at all.
Bronson is founder and president of Mastery Partners and the Business Transitions Summit, and a founding partner of NorthStar Mergers & Acquisitions. Earlier in his career, he directed a roll-up in medical distribution that acquired 72 companies and grew the business from $2 million to $1 billion. His own operating track record is the same story he tells sellers to tell buyers: he was president of restaurant technology company DiamondTouch when, in 2010, he combined it with several other companies to form Granbury Solutions – the business he grew from 4% recurring revenue in 2004 to 72% by the time it sold in 2018.
The subject is becoming increasingly relevant in the retail IT channel. Bronson cited RSPA research showing that 34% of members want either to acquire a business or be acquired. He also said approximately 42,500 transactions occur annually across the United States and that about 97% are based on some multiple of earnings.
Those numbers point to opportunity, but Bronson’s larger message was that successful transactions rarely begin when an offer arrives. They begin years earlier, with disciplined preparation and a clear understanding of what each side needs from the deal.
Prepare before opportunity knocks
For sellers, preparation starts by viewing the company through a buyer’s eyes rather than through the lens of personal sacrifice. Years of long hours and reinvested earnings may explain what the business means to its owner, but buyers are primarily evaluating future cash flow, risk and the likelihood that performance will continue after the owner leaves.
That means cleaning up the accounting before beginning a sale process. Financial statements should clearly separate recurring revenue, hardware, software and services, along with the cost of goods sold and gross margins associated with each category. A buyer should not need weeks of analysis to understand how the company makes money.
Reducing owner dependency is equally important. If the founder controls every important customer relationship, approves every decision and holds critical operating knowledge, the buyer is not purchasing a durable company. It is purchasing a company whose performance still depends on one person.
Recurring revenue provides another major value lever – Bronson’s own 4%-to-72% conversion at Granbury Solutions is the case in point. Predictable revenue gives buyers greater confidence that the company can cover operating expenses and continue generating cash after the transaction. Bronson didn’t mince words about how seriously he takes this: “If there’s anybody in this room that is not converting everything you can to recurring revenue, see me after class.”
Growth still matters, too. Bronson advised owners to establish consistent growth and earnings for at least two or three years before going to market. A growing business with high-quality recurring revenue will generally attract more interest than a company with flat sales, declining margins or inconsistent performance.
Start with a clear acquisition thesis
Buyers have preparation work of their own. Before contacting potential targets, an MSP, VAR or ISV should be able to answer four questions:
Why are we acquiring? The goal might be adding customers, entering a geographic market, expanding a product line, obtaining talent or acquiring technology that would take too long to build.
What does the ideal target look like? Define the desired geography, size, vertical expertise, revenue mix, technology and growth stage.
How will we finance the transaction? Develop lender and investor relationships before making an offer. Financing commitments make a buyer more credible and reduce the risk of a delayed closing.
What will happen after closing? Sellers want to understand the buyer’s plans for employees, customers, products and the company’s legacy.
A clear acquisition thesis also helps buyers reject attractive-looking companies that do not support their strategy. Bronson described the alternative as creating a “Frankenstein” business composed of incompatible systems, cultures and processes.
Understand what valuation really measures
Bronson noted that there are more than 57 ways to value a business, including discounted cash flow, comparable-company analysis and asset-based methods. His point was not that valuation work has no purpose. It was that a theoretical calculation is still only an estimate until an informed buyer and willing seller agree on a price.
He was pointed about one common mistake: don’t let your CPA run that valuation. In his experience, 9 out of 10 CPAs default to a discounted cash flow model – a method he says is used in essentially zero actual business sales and is only accepted by courts in disputes like divorce cases. A proper valuation from an M&A professional familiar with technology-channel transactions typically runs $2,500 to $5,000, and Bronson argued it’s cheap insurance against walking into a sale with unrealistic expectations.
Because most transactions use earnings multiple, buyers examine future cash flow, return on investment and return on invested capital. Bronson used a range of three to six times earnings to illustrate how recurring revenue, growth, scale and risk can move a company toward the high or low end of its applicable market range.
Owners should be careful with that shorthand. “Earnings” could refer to seller’s discretionary earnings, adjusted EBITDA or another calculation, and the appropriate multiple varies by company size, business model and current comparable transactions.
The 4 Ms of M&A
Bronson organized the competing priorities of buyers and sellers into four categories: Money, Motivation, Method and Match.
1. Money
Sellers tend to look backward at the years of effort invested in the company. Buyers look forward, asking whether future cash flow can support the purchase price and produce an acceptable return. Neither perspective disappears during negotiation, but recognizing the difference can keep emotional expectations from derailing the deal.
2. Motivation
A planned transition, such as retirement, burnout or wealth diversification, generally gives a seller more leverage than an urgent sale caused by illness, financial distress or another forced circumstance. Buyers must also explain their motivation. Acquiring a customer base, entering a new vertical and obtaining specialized technology can lead to very different integration plans.
3. Method
Headline price is only one part of an offer. Buyers and sellers can use seller financing, indemnity holdbacks, contingent payments and earn-outs to finance the transaction and allocate post-closing risk. Two offers with the same stated price can therefore produce very different outcomes for the seller.
Bronson cautioned sellers against accepting earn-outs based on earnings or EBITDA because the buyer controls expense allocation and other accounting decisions after closing. He recommended using clearly defined, independently measurable metrics such as revenue or customer retention. His broader rule was straightforward: receive enough at closing that the deal remains acceptable even if no contingent payment ever arrives.
4. Match
Financial compatibility does not guarantee a successful acquisition. Buyers must also evaluate culture, leadership, systems, customer expectations and operating processes. A company that looks attractive in a spreadsheet can destroy value if employees leave, customers feel neglected, or the organizations cannot work together.
Take your business to market the right way
Sellers who try to run their own sale process rarely get the outcome they expect, according to Bronson. His recommended path starts with hiring an M&A professional rather than negotiating directly –a good one, he said, pays for himself many times over through expertise, buyer networks and credibility.
From there, the process typically runs through building marketing materials and a data room, then a “teaser” –a short, anonymized summary that hints at the opportunity without naming the company – followed by a confidential information memorandum (CIM) that goes into real depth once a buyer signs an NDA. Bronson said the goal of the CIM isn’t to sell every buyer; it’s to let the wrong buyers rule themselves out quickly. His own numbers illustrate the funnel: 414 inquiries on one deal produced only 25 to 30 real conversations.
A professional video presentation, told from the seller’s perspective, often rounds out the materials. From there, an M&A firm markets the opportunity through its own database of categorized buyers as well as public deal marketplaces such as Axial, BizBuySell and LoopNet.
The payoff for all that process: multiple offers instead of one. Bronson’s warning about the alternative was blunt – “If you have one buyer for your business, you have no buyers,” since a single interested party gives the seller no leverage at all. That’s also his case against unsolicited, off-market offers, which he said usually come from wholesalers who know they’re the only bidder in the room.
Due diligence tests every assumption
Bronson described due diligence as an exhausting process that can last 90 to 120 days. The buyer’s stated goal is to validate the investment thesis. The practical goal is to discover what the seller did not disclose. For sellers, proactive transparency and an organized data room are far safer than waiting for buyers to uncover problems.
For MSPs, VARs and ISVs, due diligence should examine more than the income statement. Important areas include:
- Revenue quality: recurring-revenue percentage, renewal rates, customer churn and customer concentration.
- Margin quality: profitability by hardware, software, services and managed offerings.
- Contract quality: renewal provisions, assignability, service obligations and vendor or platform dependencies.
- Operational durability: owner dependency, key-employee risk, service delivery processes and documentation.
- ISV technology: code quality, technical debt, architecture, scalability and the age of the technology stack.
- People and culture: leadership depth, compensation, retention risk and compatibility with the buyer’s organization.
Undisclosed problems can lead to a lower purchase price, payment clawbacks or post-closing litigation. Complete disclosure does not eliminate every difficult negotiation, but it reduces the likelihood of a damaging surprise after both sides have invested months in the transaction.
Negotiate more than the purchase price
The letter of intent should address the terms most likely to create conflict later. That includes cash paid at closing, seller financing, holdbacks, earn-out measurements, working-capital requirements, exclusivity, transition obligations and the seller’s post-closing role.
Working capital deserves special attention because the buyer may require the seller to leave enough capital in the company to support normal operations. If the parties do not define the working-capital target early, the seller can reach closing and discover that expected proceeds are lower than anticipated.
Bronson also advised sellers to avoid lengthy exclusivity periods that prevent them from speaking with other buyers while the transaction drifts. He recommended a staged process with milestones and an outside limit of approximately 120 days.
Plan integration before closing
Integration planning cannot wait until the transaction is complete. Before closing, the buyer should decide whether to migrate customer data, consolidate platforms, change support processes, cross-sell services or allow the acquired company to continue operating independently.
Bronson summarized the people side of integration with three Cs: crystal-clear communication. Employees need to understand changes to payroll, benefits, reporting relationships, workflows, performance expectations and the combined company’s direction. Customers need to know what is changing, what is staying the same and whom they should contact for support.
Sellers who remain during a transition have their own adjustment to make. The day after closing, someone else may have final decision-making authority. Bronson was candid about how hard that can be even for someone who ran the process from the other side: after staying on post-sale, he said he discovered he’s not just a difficult employee – “a nightmare employee,” by his own admission – when he isn’t the one in charge. A successful handoff requires the former owner to support the new leadership, reinforce new processes and avoid undermining the changes employees are being asked to make.
10 deal killers to avoid
Bronson closed with a rundown of the mistakes that most often sink a transaction – or cost a seller money at the closing table:
- Unrealistic valuation expectations. The most common deal killer. Get a professional M&A valuation, not a CPA’s discounted cash flow estimate.
- Undisclosed issues. The leading cause of post-closing lawsuits. Disclose everything before due diligence begins, not during it.
- Unsolicited low-ball offers. A single buyer means no leverage. Market broadly through an M&A professional instead.
- Inadequate buyer due diligence. Clean, transparent accounting heads off renegotiation later. Watch customer churn especially closely.
- Last-minute price renegotiation. Thorough upfront diligence and a detailed LOI – plus multiple interested buyers – remove the leverage a buyer needs to pull this off.
- Long exclusivity periods. Cap it at 120 days with staged milestones, not an open-ended six-month freeze.
- Owner dependency. Start building a business that runs without the founder years before a sale, not during the process.
- Low recurring revenue. Even a partial shift toward recurring revenue meaningfully improves the multiple a buyer will pay.
- Inadequate buyer financing. Lender letters of support before the LOI make a buyer credible and prevent closing delays.
- Poor financial documentation. “Dirty books” create suspicion. Clean, easy-to-read financials build buyer confidence in the valuation.
Build a better business, whether you sell or not
One of Bronson’s most useful observations was that preparing a business for sale can improve it even if a transaction never occurs. Clean financials, recurring revenue, documented processes, stronger leadership and less owner dependency make the company easier to run and give the owner more options.
The same principle applies to buyers. Defining an acquisition thesis, arranging financing and developing an integration playbook before finding a target can prevent an exciting opportunity from turning into an expensive distraction.
M&A may culminate in a transaction, but it is ultimately a relational and strategic process. The MSPs, VARs and ISVs most likely to succeed will be those that prepare early, understand the other party’s priorities and remain disciplined enough to walk away from the wrong deal.
