Buyer-Backsolved Business Plan
Ask likely buyers what creates value, then build those capabilities
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 98%
While building Teles Properties, Sharran Srivatsaa softly shopped the company each summer because he did not know what it was worth. He approached several large potential buyers, asked what they would pay, and then asked what the company would need to possess to justify a higher target valuation. The buyers' answers became a list of operating requirements, which he handed to his chief operating officer as the following year's business plan. He repeated the cycle for three years. This creates a buyer-backsolved plan: current company inputs produce a current valuation; a desired valuation exposes missing capabilities; execution closes that gap. Repeated delivery also creates credibility because the prospective buyers can see that their prior requirements were actually built.
Origin
Extracted from Coffeez for Closers. Sharran Srivatsaa used this annual process while growing Teles Properties before its sale to Douglas Elliman.
Core principles
- 01Likely buyers define value more accurately than founders do
- 02A valuation gap can be translated into operating requirements
- 03Repeated buyer feedback can become an annual business plan
- 04Building against a buyer's model makes a future sale easier to support
How to run it
- 1
Choose credible buyers
Identify three or four organizations that could plausibly acquire the business and understand its economics.
Pro tip Use buyers whose strategic model fits the company rather than collecting generic valuation opinions.
Watch out Protect confidential information and avoid presenting a false formal sale process.
- 2
Establish today's value
Present the relevant business information and ask what the buyer would pay under current conditions.
Pro tip Ask how the buyer reached the number so you understand the model behind it.
- 3
Set the next valuation
Name a higher target and ask exactly which capabilities, metrics, or assets would make that value supportable.
Pro tip Capture the requirements in operational language that a leadership team can act on.
Watch out Do not treat an informal valuation as a guaranteed future offer.
- 4
Build the requirements
Convert the buyer's list into the next operating plan and assign it to the leaders responsible for execution.
Pro tip Prioritize requirements that strengthen the company even if a sale never occurs.
- 5
Repeat and document
Return after execution, request a fresh valuation, and repeat the target-gap conversation.
Pro tip Keep a record of what buyers requested and what the company delivered each year.
In the wild
Each summer, Sharran approached several large suitors, learned the current value of Teles, and asked what the company needed for the next valuation level. He gave the resulting requirements to his chief operating officer as the next year's plan and repeated the process for three years.
→ The company became tighter, and later sale conversations were easier because buyers had watched it build what they requested.
Common mistakes
Guessing what buyers value
A founder's internal plan may not reflect the model a real acquirer uses to price the business.
Optimizing only for a sale
Buyer feedback should produce a stronger operation, not leave the company dependent on one speculative transaction.
Treating feedback as an offer
The process supplies market-informed requirements, but an informal valuation is not a binding acquisition proposal.
Is it for you?
Best for
It is best for founders who want a tighter business and can hold discreet, credible conversations with potential acquirers.
Not ideal for
It is not ideal when no credible buyer can assess the company or when sharing information would create unacceptable competitive risk.
From the transcript
“every summer I would shop the business softly”
“I took the ABCDE handed it to my coo that became the business plan for next year”
“shopping the business every year made us have a much tighter business”
From the episode
Real Entrepreneurship Spirit with Sharran Srivatsaa