Building a Financial Story Buyers Trust in M&A -

When you get deep into an M&A deal, there’s a universal truth that becomes crystal clear:

Deals don’t fall apart because buyers can’t read spreadsheets. They fall apart because they don’t trust the financial story.

As I’ve shared repeatedly with founders at Legacy Advisors — and on multiple episodes of the Legacy Advisors Podcast — buyers aren’t just analyzing your financials; they’re evaluating your financial credibility.

The founders who win premium exits understand that clean financials aren’t enough. They build a story — a narrative — that explains where the business has been, where it’s going, and how buyers can believe in the numbers.

In this article, we’re going to break down what makes a financial story “buyer-friendly,” why it matters so much in M&A, and how founders can start building it long before diligence begins.

Why Buyers Don’t Buy Spreadsheets — They Buy Stories

At its core, M&A is all about future value.

Will revenue continue?
Will margins hold?
Can synergies be captured?
Is growth predictable?

The problem is that spreadsheets — no matter how detailed — rarely answer these questions with confidence.

What buyers really want is a financial story that:

Explains historical performance
Frames near-term growth
De-risks long-term forecasts
Connects operations to financial outcomes
Matches what they see during diligence

When your financials align with a clear, defensible narrative, buyers feel comfortable — and comfort directly translates to valuation.

The Risk of Financial Fog

At Button Holdings, I’ve seen it over and over:

Companies with solid EBITDA but messy reporting lose buyer confidence.
Founders with aggressive addbacks lose credibility.
Inconsistent data between CRM, financials, and bank statements creates diligence friction.
Unexplained revenue swings trigger skepticism.

Even businesses with great products and loyal customers can lose 1-2 turns of valuation simply because their financial story feels confusing, defensive, or incomplete.

Buyers never pay premiums for confusion.

The Four Elements of a Financial Story Buyers Believe

At Legacy Advisors, we coach founders to build their financial story across four key dimensions:

1️⃣ Clean Historical Data

“Start with the past — but make sure it’s bulletproof.”

Buyers will analyze:

Revenue recognition policies
Timing of bookings vs. collections
Customer concentration trends
Margin consistency
Seasonality adjustments
Expense categorization clarity

Sloppy financials force buyers to build risk buffers into valuation models. Clean financials invite aggressive offers.

2️⃣ Clear Growth Drivers

“Help buyers connect your past to your future.”

Your growth story should clearly explain:

Where revenue growth came from historically
What customer segments or products drove expansion
How marketing and sales engines generate pipeline
What operational changes fueled margin improvement

When buyers understand exactly how you grew, they gain confidence you can continue.

3️⃣ Defensible Forecasts

“Don’t sell a hockey stick — sell believable upside.”

Buyers evaluate forecast credibility based on:

Historical forecasting accuracy
Pipeline conversion metrics
Sales rep productivity models
Customer cohort retention
Realistic cost scaling assumptions

Overly rosy projections create suspicion. Reasonable, data-backed forecasts create trust.

4️⃣ Proactive Normalization

“Control your addback narrative before buyers do.”

Buyers expect EBITDA normalization — but they scrutinize:

Owner compensation adjustments
One-time legal or consulting fees
Non-recurring expenses
Early-stage investments
Discretionary spending

Document addbacks in advance with clear support. If buyers perceive “EBITDA engineering,” they’ll reduce valuation and structure aggressively.

The Role of Financial Storytelling in Negotiation

A clean financial story strengthens your hand in multiple areas:

Deal Stage	Financial Story Impact
Pre-LOI	Creates buyer interest and tension
LOI Negotiation	Supports higher multiples
Diligence	Reduces deal friction and surprises
Purchase Agreement	Lowers reps, warranties, and escrows
Post-Close	Builds trust for integration success

When buyers trust your financial story, everything downstream in the deal process gets easier — and more lucrative.

Podcast Insight: The Founder’s Story Must Match the Numbers

As I shared on Episode 8 of the Legacy Advisors Podcast, buyers don’t just listen to your banker pitch — they watch how you, the founder, present the numbers.

If your growth story can’t be supported by your financial reporting, buyers start wondering:

What else haven’t we seen?
Is this founder overly optimistic?
Will integration surprises pop up post-close?

The founder’s confidence only helps when it’s anchored in data integrity.

The Biggest Mistake Founders Make in Financial Storytelling

The #1 mistake? Building the financial story too late.

Many founders wait until bankers are preparing CIMs or buyers request diligence materials to start cleaning up financials. At that point:

Inconsistencies surface.
Delays frustrate buyers.
Surprise adjustments reduce multiples.
Structure shifts to protect the buyer.

The best time to build your financial story? 12 to 24 months before exit.

How to Start Building a Buyer-Ready Financial Story

At Legacy Advisors, our financial story preparation includes:

1️⃣ Upgrade Financial Systems

Use GAAP-based accounting
Clean historical reporting
Implement accrual-based revenue recognition
Integrate CRM, ERP, and finance systems

2️⃣ Hire or Elevate a Strong CFO

CFO should own reporting, forecasting, and addback justification
Founder steps back from detailed financial defense during diligence

3️⃣ Conduct Internal QofE Reviews

Preemptively analyze your own numbers like a buyer would
Fix inconsistencies before buyers discover them

4️⃣ Build Forecasting Discipline

Use rolling forecasts
Track forecast accuracy monthly
Document key assumptions buyers will scrutinize

5️⃣ Create Addback Workbooks

Fully support EBITDA normalization adjustments
Be transparent upfront — not reactive during diligence

PE vs. Strategic Buyer Financial Lens

Buyer Type	Financial Story Focus
Private Equity	Emphasizes EBITDA normalization, cash flow stability, and debt capacity
Strategic Buyers	Emphasizes revenue synergy potential, cross-sell opportunities, and integration simplicity

Both buyer types reward financial clarity — but approach the story through slightly different deal models.

Case Study: How Financial Storytelling Unlocked a 20% Higher Multiple

We advised a founder-led B2B SaaS business with $14M ARR preparing for exit.

Before taking the company to market, we:

Restated 3 years of revenue to reflect GAAP-recognized subscription contracts
Cleaned up expense categorization between COGS and OpEx
Documented SaaS cohort metrics: churn, NRR, CAC, LTV
Prepared detailed addback schedules for one-time legal and founder expenses

The result?

Buyers saw consistency between management presentations and financial reports.
Diligence was completed in 60 days.
Multiple PE and strategic buyers competed aggressively.
The deal closed 20% above initial valuation targets.

The kicker? The financial story created buyer tension — not just buyer comfort.

The Power of Buyer Tension

This is where financial storytelling becomes truly valuable:

When multiple buyers see clean, consistent numbers…
When forecasting assumptions match operational KPIs…
When addbacks are fully documented before diligence…

… buyers compete harder — not because your financials are perfect, but because they believe they’re credible.

And credible financials are the foundation for premium exits.

What Buyers Fear Most in Financial Diligence

If you want a simple checklist of what kills buyer trust quickly, here it is:

Inconsistent revenue reporting across periods
Aggressive addbacks without documentation
Mismatches between CRM pipeline and booked revenue
Customer churn hidden inside revenue growth
Cash-based accounting that hides timing issues
Lack of reconciled financial statements
“We’ll get you that later” answers during diligence

The more you eliminate these issues in advance, the stronger your position becomes.

The Founder Mindset Shift

Founders often approach exit prep thinking:

“Our financials aren’t that messy.”

Instead, adopt this mindset:

“Our financial story is a product — just like our company.”

The better you package, simplify, and de-risk that story, the higher the market will value you.

Final Thoughts

Buyers don’t need perfection. They need confidence.

When you present:

Clean historical data
Transparent growth drivers
Defensible forecasts
Fully documented addbacks
Consistency between your story and your spreadsheets…

… you unlock buyer trust — and trust is what gets you paid.

As I tell founders at Legacy Advisors every week:

“The real negotiation isn’t over your EBITDA multiple — it’s over whether the buyer believes your financial story.”

Build it right. Build it early. And let buyers compete for the chance to own your future.

Frequently Asked Questions About Building a Financial Story That Buyers Understand

Why is financial storytelling so important during M&A?

Because buyers aren’t just buying what the numbers say — they’re buying whether they believe the numbers reflect future stability. Financial storytelling helps buyers connect historical performance, growth drivers, and forecast credibility into a clear narrative that reduces their perception of risk. As Ed Button, Jr. often shares with founders at Legacy Advisors, buyers don’t invest purely based on spreadsheets — they invest based on confidence. The more clearly you connect your financials to the real-world operations of your business, the stronger your position during valuation and deal structure negotiations.

What causes buyers to lose confidence during financial due diligence?

The most common triggers are inconsistent reporting, aggressive or unsupported addbacks, revenue timing discrepancies, and mismatches between operational KPIs (like pipeline, churn, or bookings) and the financial statements. Buyers also get nervous when founders can’t explain growth drivers or when forecasts seem overly optimistic without clear data support. As Ed frequently emphasizes, financial fog breeds buyer caution — and caution always gets priced into the deal, often through lower valuations, longer earnouts, or heavier diligence requirements.

When should founders start building a buyer-ready financial story?

Ideally, 12 to 24 months prior to a planned exit. Waiting until you enter diligence is too late. Buyers want to see multiple quarters — if not years — of clean, consistent reporting before they’ll underwrite premium valuations. Starting early allows you to:

Upgrade financial systems
Reconcile historical inconsistencies
Build forecasting discipline
Validate pipeline conversion metrics
Document addbacks with full transparency
Early preparation makes the entire M&A process smoother and increases negotiating leverage once buyers engage.

How should founders approach EBITDA normalization and addbacks?

Buyers expect EBITDA normalization, but they scrutinize how adjustments are presented. The best approach is full transparency, with clear, well-documented addback schedules for:

Non-recurring legal, consulting, or one-time costs
Owner compensation adjustments
Personal expenses previously run through the business
Early-stage investments or R&D spikes
Founders should avoid aggressive or speculative addbacks that signal “EBITDA engineering.” A well-prepared addback workbook — supported by financial records — shows buyers you’ve done the work upfront, which builds trust and reduces negotiation friction during diligence.

How does a strong financial story affect deal structure, not just valuation?

A credible financial story doesn’t just drive purchase price — it also improves deal structure terms. When buyers believe the numbers, they’re more likely to offer:

Higher cash at close
Reduced reliance on earnouts
Smaller escrows and indemnification caps
Faster diligence timelines
Less invasive reps and warranties coverage
As Ed Button, Jr. often emphasizes at Legacy Advisors, clean financials are one of the few deal levers founders fully control — and strong financial storytelling can unlock millions of dollars in value not just in headline price, but in how and when founders get paid.