The €3-10M revenue segment has its own dynamics in a sale: faster processes, more personal relationships, different valuations. Everything an SME owner needs to know before starting the process.
Selling a company with €5 million revenue is not the same as selling one with €50 million. Not because one is more valuable than the other — that depends on fundamentals, not size — but because the process, the dynamics, and the priorities are different.
The SME owner in the €3-10M range searching for information on selling their company will find, in most cases, guides written for larger transactions: processes with dozens of advisers, hundred-page information memoranda, and auction processes with multiple bidders. That is not their world. Their process will be more direct, more personal, and in many ways more human.
This guide is written specifically for the business owner in that segment.
In the €3-10M revenue segment, the sale price is almost always negotiated as a multiple of EBITDA, not of revenue. It is a fairer and more informative criterion: two companies with the same revenue but very different margins have very different values.
Typical multiples in this segment in Spain range between 3 and 7 times EBITDA, with an average that in most sectors sits between 4 and 5.5 times. It is not the same multiple paid for a €50M technology company (where 10-15x EBITDA is common), but it correctly reflects the risk profile and dynamics of these businesses.
What moves the multiple up or down?
Upward: recurring revenues (annual contracts, subscriptions, long-term client relationships), low customer concentration risk (no single client exceeds 15-20% of revenue), management team capable of operating without the founder, consistent historical growth, sector tailwinds, valuable intangibles (brand, patents, technical know-how).
Downward: high founder dependence in sales or operations, a single client representing more than 30% of revenue, opaque accounts mixing personal and business expenses, structurally declining sector, irregular results in the last three financial years.
The EBITDA used to calculate the multiple is normalised EBITDA, not reported EBITDA. In small and mid-sized companies, reported EBITDA typically includes expenses that are not part of the business (spouse’s salary, personal vehicle, representation expenses that are in reality family expenses) and may not include the market cost of the founder’s own work if they pay themselves below market rate. Adjusting these items is the first work of any serious valuation process.
In a large company, the sale process is a corporate project with dedicated teams, investment banks, communications advisers, and months of documentation preparation. In an SME, the process is something else entirely.
The founder is the process. There is no internal M&A team. The business owner combines the sale process with the daily management of the company. That has consequences: timelines are more elastic, meetings are organised around the business schedule, and the process slows during periods of high operational activity. This is a reality that a good buyer understands and respects.
The personal relationship matters enormously. In a listed company transaction, the buyer-seller relationship is institutional: banks, lawyers, board committees. In an SME, the founder knows the buyer directly. That personal relationship shapes the process more than any M&A textbook acknowledges. The business owner needs to trust the person who is going to buy what they have built. If that trust is not established, the transaction will not complete even if the numbers work.
Timelines are shorter. In the €3-10M range, a well-executed process can close in 6-9 months from first serious contact. Large corporate M&A transactions can take 18 or 24 months. In SMEs, decision-making teams are small, bureaucracy is lower, and approval processes are more agile.
Due diligence is proportional. There is no 400-page due diligence report for a €7M company. The review is more focused: the last three financial years (audited or reviewed), the main contracts, intellectual property if applicable, the real estate situation if relevant, and the employment history. It is a more manageable process, though no less rigorous on the matters that truly count.
Preparation for the sale should begin before the decision is definitive. Ideally, two to four years before. The changes that improve a company’s value cannot be made in weeks.
Formalise the finances. Preparation matters enormously — as we discuss in our guide on selling your company. The first step is to cleanly separate personal expenses from business ones and to have financial statements that are as clean and comprehensible as possible. If the company does not have an external audit, consider having an independent review of the last two or three financial years. The cost of a few thousand euros in audit fees is recovered many times over in credibility with the buyer.
Document the key processes. How are new clients onboarded? How is production managed? What is the client service protocol? How is the annual budget prepared? In many SMEs, the answers to these questions exist only in the founder’s head. Documenting them in simple manuals or procedures has two effects: it reduces founder dependence, and it gives the buyer confidence that the business can function without them.
Reduce customer concentration. If your top three clients represent 60% of revenue, that is the risk the buyer will see first. Diversification is not easy or fast, but any progress in that direction has an impact on the price.
Strengthen the management team. Identify the person or people who can manage day-to-day operations without constant intervention from you. Give them real responsibility. If that person does not yet exist, hire someone a couple of years before the sale. The cost of that manager is, in terms of impact on the sale price, one of the best investments you can make.
Contracts in order. Check that main client contracts are current and signed (not just verbal or email), that employment contracts for key team members are appropriate, and that agreements with critical suppliers are documented. A buyer who finds verbal-only contracts with the company’s most important client will have serious reservations about the solidity of the business.
At Blue Mountain we have been working specifically in the €3-10M revenue segment for years. We have learned to identify the type of company that interests us in this bracket and to distinguish it from one that does not fit our profile.
We are interested in companies with positive and sustainable EBITDA (minimum 8-10% of revenue), with a clear competitive position in their market, in sectors that are not in structural decline, with a team that can grow with support. We do not look for companies in distress to restructure, although we are willing to analyse more complex situations when the underlying fundamentals are solid.
Sector is less determinative than fundamentals: we have acquired industrial, services, distribution and industrial technology companies. What we seek is business quality, not a specific sector.
And regarding the founder: we understand that selling a company is the most important decision of an entrepreneurial career. We do not arrive at the first meeting with a valuation model and predefined terms. We arrive to listen. To understand what you have built, why you built it, and what you expect from the process. The offer, if it comes, is the result of weeks of mutual understanding.
For the business owner thinking about this process, the first step is a conversation. No obligation, no pressure, absolute confidentiality. You can also use our company valuation tool to get an initial estimate. Let us talk.
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
If you wish to explore a potential collaboration or present an investment opportunity, we invite you to contact us. We guarantee absolute confidentiality in all our conversations.