Five Things That Move the Needle

What wire harness manufacturers should be doing now, before a buyer ever walks through the door

By Greg Shine | Managing Director, Blue Valley Capital LLC

The checklist does not care how hard you worked to build the company. It cares whether the business can support the price being asked.

I spent more than thirty-five years building and operating a wire harness company before my successful exit. When I moved to the advisory side, I came to a simple realization. Founders prepare for a sale by focusing on finding the right buyer. Far fewer spend enough time preparing for what the buyer will actually find. Those are two very different things.

Every buyer runs a process. They bring a checklist. They test the quality of your earnings, the durability of your customer relationships, the condition of your balance sheet, the depth of your management team, and the credibility of your growth story. The checklist does not care how hard you worked to build the company. It cares whether the business can support the price being asked.

That is where value is either built or lost. Here are five areas that consistently move the needle in a sale process.

1 Adjust Your EBITDA Before the Buyer Does It for You

Adjusted EBITDA is one of the main drivers of valuation. Buyers apply a multiple to that number, not to your raw P&L. If your adjustments are not clearly developed and supported before you go to market, the buyer’s QoE team will do that work for you, and they are rarely generous.

In the wire harness space, common add-backs may include excess owner compensation, personal expenses running through the business, unusual legal or consulting fees, and one-time engineering, launch, or tooling costs tied to specific programs. Some adjustments are valid. Some are not. The difference comes down to support, consistency, and credibility.

The point is not to stretch the number. The point is to get to the right number before the buyer starts pulling it apart.

The founders who are best prepared work with a transactional CPA to build a formal adjusted EBITDA bridge that ties reported earnings to adjusted EBITDA line by line, with support behind every item. That document often becomes one of the most important pieces of financial groundwork in the entire process.

2 Get Your Customer Concentration Story Straight

Customer concentration is one of the first areas a buyer will flag. If a customer accounts for 25% or more of revenue, the buyer will focus on that customer. That risk can show up in a lower multiple, a larger escrow, a holdback, or an earnout tied to customer retention.

That does not mean concentration kills a deal. It means the story around it needs to be properly framed.

A raw percentage, by itself, never tells the full story. A founder needs to be able to explain the depth and durability of the relationship: How long have you supplied that customer? Are you approved across multiple divisions, platforms, or programs? Do you support legacy work, current production, and future ramps? Are you embedded because of quality, responsiveness, engineering support, or a difficult qualification process that creates switching friction?

I have seen businesses that appeared highly concentrated on paper but looked far more durable once the underlying relationships were properly presented. Buyers will still evaluate the risk, but strong preparation changes the conversation from concern to context.

“Strong preparation changes the conversation from concern to context.”

3 Clean Up Working Capital Before Someone Else Finds the Mess

A lot of sellers lose money in working capital, not because the business is weak, but because the balance sheet was never cleaned up before diligence began.

Net working capital is one of the most misunderstood parts of a transaction. Buyers expect to receive a normalized level of working capital at closing. If accounts receivable is aged, if inventory includes obsolete or slow-moving material, if reserves are weak, or if the books are inconsistent, those issues usually show up in price negotiations or in the post-closing true-up.

In wire harness manufacturing, this matters. Customer-specific inventory, excess raw material, copper exposure, engineering change fallout, canceled builds, and old program stock can all distort the true value of inventory. The same is true with receivables that look collectible on paper but are not moving.

This work should not start three weeks before a letter of intent. It should start well in advance. Founders need to review AR aging honestly, reserve appropriately, assess obsolete and slow-moving inventory, and make sure their accounting policies are defensible. The earlier this is addressed, the more control the seller keeps.

4 Build Management Depth That Can Transfer

Most lower middle market wire harness businesses are founder-led. The owner often holds the key customer relationships, the tribal knowledge, the commercial judgment, and many of the day-to-day operating decisions. Buyers see that immediately.

If too much of the business runs through one person, the buyer is not just buying a company, they are buying dependency. That usually affects structure. It can mean less cash at close, a longer transition period, or more of the economics tied to future performance.

A transferable business is worth more than a founder-dependent business.

Buyers want to know who owns the customer relationships, who understands operations, who can make decisions, and who will still be there after closing. If every important answer begins with ‘the owner handles that,’ the buyer hears risk.

The strongest founders start solving this well before a transaction. They elevate key people into visible roles, broaden customer exposure across the team, and reduce single-person dependency. One of the most valuable things an owner can do before going to market is become less central to the daily function of the company.

5 Know Your Forward Story, Not Just Your Trailing Numbers

Trailing EBITDA matters, but buyers do not invest in the past. They invest in what they believe the business can become.

If your company has a credible growth story, it needs to be clearly built, documented, and presented. That may include new program wins, defense-related demand, increased content on existing platforms, customer expansion, reshoring tailwinds, capacity additions, or entry into adjacent markets. A good buyer will underwrite that future. A smart seller helps shape how that future is understood.

Hope is not a strategy. Forward value has to be supported.

That means building a real revenue bridge, not a wish list. It means tying growth to purchase orders, production ramps, backlog, program data, customer demand signals, and market trends that can be verified in diligence. In sectors like defense, specialty vehicle, robotics, and data center-related applications, the story often becomes stronger when it is connected to actual programs and public demand drivers, not just general optimism.

Founders often know where the business is headed. The issue is that many have never translated that knowledge into a buyer-ready narrative. When that story is vague, value gets discounted. When it is well supported, it can materially improve buyer conviction.

“When the story is vague, value gets discounted. When it is well supported, it can materially improve buyer confidence.”