In M&A, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is often the key measure of business value. Yet, many buyers hesitate when a company has an EBITDA margin below 20%, assuming it’s less profitable or less desirable. That bias, however, overlooks the real strengths of high-volume, low-margin businesses.
At Eaton Square, we know that low-margin doesn’t mean low-value—and the right buyer sees the opportunity, not just the numbers.
Who’s Buying Low-Margin Businesses? (And Why That’s an Advantage)
Unlike high-margin businesses that attract financial buyers, low-margin companies appeal to strategic buyers—industry players who understand your business model and see it as a way to scale, diversify, or increase efficiency.
Strategic buyers are:
✅ Already operating in your industry – They know the margins and don’t see them as a red flag.
✅ Focused on revenue, market share, and synergies – Not just financial ratios.
✅ More likely to pay in cash – Because they use less debt, meaning a better deal for you.
By targeting these buyers, we turn perceived weaknesses into selling points—getting you the best deal possible.
Why Low-Margin Businesses Can Be High-Value Acquisitions
What financial buyers see as a challenge, strategic buyers recognize as an asset.
🔹 High-Volume, Predictable Sales – A steady revenue stream from repeat customers.
🔹 Diverse Customer Base – Reducing risk and making revenue more stable.
🔹 Operational Efficiency – Lean processes and optimized supply chains.
🔹 Scalability – A proven model that can expand into new markets.
🔹 Competitive Moat – Lower margins discourage new competitors from entering the space.
🔹 Cash Flow Velocity – Faster capital movement improves return on investment.
Turning Buyer Bias into a Competitive Advantage
With our global network and deep M&A expertise, we position low-margin businesses as high-value opportunities—connecting sellers with the right buyers who appreciate their true worth.
If you’re considering a sale, let’s discuss how to maximize your company’s value. Contact us today.
Robert Latham
Principal
Robert Latham is a Principal at Eaton Square and a managing partner at IBG’s Texas office.
Bob offers extensive M&A experience in the purchase and sale of businesses in the manufacturing, construction, maintenance, and distribution sectors and in logistics and other B2B services.
[email protected]
Ph: +1 713-463-9222
