This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
A common 2026 Florida sell-side pattern looks like this. A founder-led company with $2 million of run-rate EBITDA has been approached by two strategics and one lower-middle-market private equity buyer. The founder’s controller — competent, five years in the seat, three-quarter-time — closes the books on a modified-cash basis, ties out payroll to the general ledger once a month, and cannot produce a normalized trailing-twelve-months P&L without two weeks of notice. The founder’s tax accountant, sitting in a separate firm across town, prepares the year-end returns on a pass-through basis. Neither the controller nor the tax accountant has been through a quality-of-earnings analysis before. When the LOI arrives, it will price the business off whatever revenue and EBITDA number the buyer’s Q of E provider decides is defensible — and the buyer’s Q of E provider has strong opinions about add-backs, working-capital normalization, and revenue-recognition cutoffs that the seller’s finance team has never had to defend.
The 90 days before the LOI is when a sell-side CFO — usually a fractional or interim engagement, not a permanent hire — earns the largest single dollar-per-hour return available anywhere in the Florida lower-middle-market deal stack. The math is not close. A well-executed 90-day pre-LOI CFO engagement at $20,000 to $40,000 total cost consistently adds a quarter to a full turn to the multiple on a $2 million EBITDA business. At 6x, half a turn is $1 million of enterprise value. Even a quarter turn covers the CFO fee thirty times over. The founders who understand this arithmetic hire the CFO before the LOI arrives. The founders who don’t understand it wait until the Q of E report shows up and try to renegotiate from behind.
The three deliverables a real sell-side CFO produces in 90 days
The sell-side CFO engagement is not the same job as running the finance function in a going concern. It is a compressed, deal-specific project with three deliverables that map directly onto how the buyer’s Q of E provider will build its report.
The first deliverable is a clean, defensible, trailing-twelve-months normalized EBITDA schedule. Normalization means adjusting reported EBITDA for one-time items, owner-related compensation, non-recurring litigation and settlement costs, non-arm’s-length rent, pandemic-era items still bleeding through, and any accounting policy the buyer will characterize as aggressive. The output is a two-page schedule that walks reported EBITDA to normalized EBITDA line by line, with a supporting documentation binder that ties every add-back to a source document. This is the schedule the sell-side banker uses in the CIM. This is the schedule the buyer’s Q of E provider tests against. And this is the schedule that, if it survives the Q of E process with minor adjustments, delivers the pricing at LOI.
The second deliverable is a working-capital peg and true-up mechanism the seller can defend at signing. Working capital is where lower-middle-market deals quietly hemorrhage value between LOI and close. A buyer who anchors on a 12-month rolling average working capital as the peg captures every accounts-receivable spike, every seasonal inventory build, and every prepaid-expense timing artifact in the seller’s operating cycle. A seller with a well-constructed working-capital schedule and a defensible normalization argument — trailing three months, or a seasonal average, or a target that excludes a specific customer’s late-payment history — can move the peg by five to eight percent of enterprise value on a lower-middle-market deal. The sell-side CFO builds the schedule and the argument in the 90-day window; the founder alone does not.
The third deliverable is a data-room package the buyer’s Q of E provider can consume without three weeks of clarifying questions. The list is specific: monthly trial balances for the trailing 36 months, payroll registers tied to Forms 941 and W-2s and 1099s, aged AR and AP with weekly rollforwards, the fixed-asset roll and depreciation schedule, customer concentration by revenue for the trailing 24 months, revenue-recognition documentation for the top 20 customers, a copy of the general-ledger export in a format the Q of E provider can load, and — usually forgotten — a memo from the seller’s CPA on any accounting policies that differ from what a first-time buyer would expect. The Q of E provider bills by the hour; a well-organized data room shortens the Q of E from ten weeks to six and preserves the buyer’s LOI-stage pricing.
Where the 0.5x actually comes from
The half-turn multiple lift is the math of three separate mechanisms compounding. First, a defensible normalized EBITDA reduces the buyer’s negotiated haircut. On a $2 million reported EBITDA business with $200,000 of one-time and owner-related items, the seller who arrives at the LOI with a documented $2.2 million normalized EBITDA is priced on that number. The seller who arrives with $2.0 million reported and hopes the buyer will accept the add-backs mid-diligence is priced on $2.0 million, and the buyer captures the $200,000 delta at 6x — $1.2 million of enterprise value that would have belonged to the seller.
Second, a well-built working-capital peg preserves cash at close. The typical lower-middle-market working-capital dispute at closing is worth two to four percent of enterprise value, and it almost always tilts the buyer’s way when the seller has no baseline to anchor to. A sell-side CFO who builds the working-capital analysis into the deal file at signing can hold this line during diligence.
Third, a clean data room accelerates the deal timeline. Every additional week between signing and close increases the probability of a repricing event — a customer loss, an unexpected quarter, a change in the buyer’s investment committee’s appetite. The Q of E-ready data room that shortens the closing timeline by four weeks reduces the probability of an interim repricing by roughly a proportional amount. This does not always translate into a higher multiple; it translates into the LOI multiple actually closing at the LOI number.
These three mechanisms are the reason experienced private-equity buyers can tell within thirty minutes of the first management meeting whether the seller has a real sell-side CFO in place. If the seller cannot walk through the normalization schedule off the top of the founder’s head, the buyer’s IC prices the deal for the risk of an unfavorable Q of E surprise. If the seller can, the buyer prices the deal for the reps and warranties.
The signs the deal will get repriced without this hire
There are five signs that a sell-side deal will get repriced during diligence if no CFO joins in the 90-day window. First, revenue recognition sits on a modified-cash or hybrid basis and the seller cannot produce a GAAP-adjusted revenue number without weeks of work. Second, owner compensation includes both a salary and a distribution and the seller has never separated the two in the P&L. Third, personal expenses run through the company card and the seller does not have a written add-back schedule. Fourth, related-party rent or related-party services are priced above or below market and the seller has never obtained a market-rate benchmark. Fifth, customer concentration exceeds twenty percent for a top account and the seller has no long-term contract or renewal history to point to.
Each of these fact patterns is fixable in the 90-day pre-LOI window if a CFO joins on day one. Each of them is a repricing event if the buyer’s Q of E provider surfaces it first. The CFO’s job is to raise, document, and pre-empt every one of them before the sell-side banker sends the CIM.
How the CFO engagement interacts with the buyer’s Q of E
Buyer Q of E work is not adversarial in the litigation sense, but it is adversarial in the negotiating sense. A Q of E provider retained by the buyer is paid to find EBITDA reductions the buyer can use at LOI-adjustment or in the working-capital true-up. The sell-side CFO’s job is to make the Q of E provider’s marginal hour of work produce no incremental adjustment. That is achieved by front-running the Q of E process — building the same schedules the Q of E provider will build, in advance, with the same source-document trail.
The AICPA’s guidance on quality-of-earnings engagements is worth reviewing at the front of any sell-side CFO scoping call. The most current framework is available at the AICPA quality-of-earnings resource center, which lays out the buyer-side engagement scope the sell-side CFO is preparing to defend against.
Where this fits in the broader Florida sell-side playbook
The 90-day CFO hire is one of three or four decisions a Florida founder makes in the year before going to market that meaningfully move the multiple. It sits alongside the choice of sell-side banker, the choice of transaction structure (asset versus stock, F-reorg versus direct sale), and the timing of the tax-basis step-up analysis. For a more general treatment of how these pieces fit together, see the internal resources at montague.law M&A practice and the primer on how founders and deal teams should read financial statements at how founders and deal teams should read financial statements.
The founders who leave the sell-side CFO decision until after the LOI often blame the buyer’s Q of E for a lower final number. The founders who make the hire 90 days before the LOI rarely have to. The half-turn is not a rumor and it is not a marketing number; it is what falls out of the arithmetic when the seller’s normalized EBITDA, working-capital peg, and data-room package survive first contact with the buyer’s diligence machine. On a lower-middle-market Florida deal, the CFO fee is the highest-return line item in the founder’s entire go-to-market budget.
If you are a Florida founder within a year of going to market and want to talk through the sell-side CFO scoping decision — or a sponsor negotiating a Q of E scope on a Florida target and looking to pressure-test the seller’s normalization — feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
— John
