Two founders in the same industry, with broadly comparable revenue, broadly comparable EBITDA, broadly comparable customer counts, and broadly comparable management teams, can close at multiples that are several turns apart. The market reads the gap as luck, or as a function of which banker each founder used. The structural picture is different. The gap is mostly explainable from what the two businesses look like at the line items the buyer's underwriting model actually weighs, and from how well each founder's preparation work matched the underwriting model of the buyer who eventually showed up.
We published a working paper this month that quantifies this (DOI 10.2139/ssrn.6735844). The headline number is that the median divergence in indicated value across the three buyer archetypes (strategic acquirers, private equity platforms, search funds or independent sponsors) for the same target was 31 percent of the highest indicated value. Seventy-eight percent of observed transactions exhibited divergence greater than 20 percent. That is not noise. That is the underwriting models being structurally different from one another, applied to the same business, producing forecastable differences in indicated value.
The implication for two sellers in the same industry is that the "same industry" framing is the wrong unit of comparison. The right unit of comparison is buyer-archetype fit. Two businesses that look similar from the outside can sit in entirely different positions on the underwriting map. One is a strategic-fit business whose synergy case is real and well-supported, and the strategic acquirer that bids will pay above what the standalone financials justify. The other is a platform-fit business whose recurring revenue density and management depth make it underwriteable by a PE platform against an exit five to seven years out, and the platform bid will be anchored to what the platform believes a future buyer pays. The two multiples will be different. Neither buyer is mispricing. They are pricing against different futures.
Three structural features account for most of the difference between the high-multiple closer and the in-line closer in the same industry band.
The first is the density of recurring revenue. Recurring revenue is the line item that disproportionately drives platform PE indicated value, because it lowers the discount rate the platform applies over the hold period. Two businesses with the same headline revenue can have very different recurring revenue densities, and the higher-density business will clear at a meaningfully higher multiple when a platform shows up. The preparation work that builds recurring revenue density (contract structure, retention engineering, pricing model conversion) is operating-cycle work, not marketing work. It takes quarters, not weeks.
The second is the defensibility of the customer cohort. Two businesses with the same customer count can have very different cohort durabilities. One concentrates risk in a small number of accounts whose loss would impair the business. The other has built customer acquisition and retention disciplines that produce cohorts whose behavior is predictable across windows. The cohort-durable business clears at a higher multiple against every buyer archetype, because the underwriting models all penalize cohort fragility, even where they differ on everything else.
The third is the depth of operating leadership underneath the founder. This is the slowest moving of the preparation work streams and the one founders most often underinvest in. The business with a credible second layer of operating leadership clears at a higher multiple than the business that depends on the founder to function. The strategic buyer pays more because the synergy case retains. The platform buyer pays more because the value creation plan executes after the founder's transition. The search or independent sponsor buyer pays more because the personal capacity gap is smaller.
The combination of these three features (recurring revenue density, cohort durability, management depth) explains a substantial share of the indicated value divergence we see at LOI within a single industry. The two founders in the same industry who closed at very different multiples did not get lucky or unlucky. They arrived at the marketing window with very different structural readiness for the underwriting model the eventual buyer was running.
The further implication, and the one most relevant to founders who still have runway, is that the structural readiness is buildable. The three features above are buildable in operating-cycle time. None of them is buildable in the marketing window. The founders who close at the high end of their industry's multiple band are almost without exception the founders whose advisors ran a structural diagnostic at the right runway and built a preparation work plan against the gaps the diagnostic surfaced.
There is one further reframe that matters. The high-multiple close is not principally a function of which buyer archetype shows up. It is a function of how well the preparation work matches the archetype that does show up. A founder who has built recurring revenue density and management depth in preparation for a platform PE process can still clear at a strong number against a strategic acquirer whose synergy case happens to be real. The preparation work is structural, not archetype-locked. The buyer-archetype decision narrows the work and sequences it, but the work itself raises the floor of indicated value across every archetype that could plausibly bid.
The shortest version of the answer to "why did the two sellers in the same industry close at such different multiples" is that the two businesses were not, on the underwriting line items that matter, in the same industry. They were in the same industry as the market labels it, and in structurally different positions as the underwriting models read them. The work that closes the gap is real, sequenced, and bookable in advance.