The Australian mid-market is active. Investors, both trade and private equity, are deploying capital and looking for opportunities. But the conversations we are having with investors sound very different from a few years ago.

The appetite is there. The discipline is sharper.

If you’re a business owner thinking about a transaction in the next one to three years or an advisor helping a client prepare for one, here’s what we are seeing across the deals and our discussions.

Quality Over Narrative
Investors have always valued strong fundamentals such as consistent revenue, repeatable margins and a track record that holds up under scrutiny. That hasn’t changed. What has changed is how willing they are to look past gaps in the numbers.

During the post-COVID period, capital was abundant and competition for deals was fierce. Investors were more inclined to back a compelling growth story, even where the financials weren’t fully proven. That tolerance has narrowed considerably. Today, the same investors are still active and still deploying capital but they’re holding businesses to a higher standard before committing.

The bar hasn’t moved. The willingness to make exceptions has.

Your Financials Are Your First Impression
This is where deals stall or die quietly.

Investors and their financiers want earnings they can defend to a credit committee or investment board. That means clean financial reporting, sensible adjustments and numbers that don’t require a guided tour to understand. When normalisations start not stacking up or the gap between reported and adjusted EBITDA needs too much explaining, confidence drops quickly.

In the Australian mid-market, where many businesses have grown through a combination of hard work and pragmatic bookkeeping this can be a real vulnerability. The owners who invest in getting their financials audit-ready or at least due diligence-ready well before going to market give themselves a genuine edge.

Structure Is the New Normal
Here’s a conversation we have regularly. An owner has a number in mind, and they want it all on completion day. We understand the instinct but in the current market deal structure is often where the real outcome is shaped.

Earn-outs, deferred consideration, vendor finance and performance-linked payments are standard features across mid-market transactions in Australia right now. This isn’t a sign of weak demand; it’s how investors manage risk while still offering valuations that reflect genuine business value.

The owners who understand this early tend to negotiate better outcomes. Those who resist structure on principle often find themselves in longer processes with fewer options.

Accepting that structure is part of the landscape doesn’t mean accepting a bad deal. It means engaging with how transactions actually work and using that knowledge to your advantage.

The Owner Dependency Question
If you stepped away from the business for three months what would happen? It’s a confronting question, but investors are asking it in every process we are involved in.

Businesses with capable management teams, documented processes and genuine operational independence attract stronger interest and higher multiples. Where the owner is still the primary client relationship, the key decision-maker and the person everyone turns to when something goes wrong, investors see transition risk and they price for it.

Building management depth and reducing owner reliance isn’t just good business practice, it’s one of the highest-return activities a seller can undertake before going to market.

Preparation Shifts the Power Dynamic
When a business comes to market with clean data, a clear financial story and a management team that can stand on its own, the whole dynamic changes.

Due diligence moves faster. Investors compete harder. Sellers maintain more control over timing and terms.

Preparation isn’t about fabricating a story; it’s about removing the friction that slows deals down and erodes value. In our experience, the businesses that sell well are rarely the ones that decided to sell on a Tuesday and engaged on a Wednesday. They’re the ones that spent twelve to twenty-four months getting ready.

If you’re a business owner weighing up your options, or an advisor supporting a client through that process, DMA is always happy to have a confidential conversation about what preparation looks like in practice. No obligation, no pitch just an honest perspective on where things stand.

Author Divest Merge Acquire M&A Advisor , Tim Miles

Many business owners only find out what PPSR means during the critical late stages of a transaction. The process to clean up a company’s PPSR is straightforward, and preparing early reduces the likelihood of the transaction being delayed while frustratingly waiting for a third party.

What is the PPSR and why is it important in the sale of a business?
The Personal Property Securities Register (PPSR) is where lenders and businesses register their security interests over business/company assets in relation to credit terms extended to the business.

When a business/company is sold, the transaction is usually priced on a cash-free, debt-free basis, where any transferring cash or debt is adjusted for. Clear title to all assets, free of encumbrances, needs to be provided at completion.

Security interests registered on the company PPSR are encumbrances that need to be managed. The process is generally straight forward, however it can take some weeks while waiting for third parties, so it’s important this isn’t left to the last minute.

How to “clean up” the company PPSR
A PPSR search can be run for a nominal fee, and legal advisors involved in the transaction will run at least one during the process.

In consultation with legal and M&A advisors, sellers should review the PPSR list and split into three categories:

• Old charges relating to paid out loans, previous suppliers etc. – it costs banks money to remove a PPSR charge so in many cases they only do so if requested. Sellers should contact any in this category as soon as possible to remove the registered interests.
• Charges that relate to ongoing supply arrangements – Seller should nominate these for lawyer to include as Permitted Encumbrances in the transaction documents. Provided the buyer agrees, these encumbrances stay in place to enable continuity of trade.
• Charges relating to loans that can only be paid out with settlement proceeds – these should be nominated and the Seller/lawyer to check bank requirements early to ensure the interest can be removed with effect from completion of the transaction.

Early preparation is key – a clean PPSR is a simple step that increases the likelihood of a deal completing on time. DMA’s process includes a step to prompt clients to act early to clear off any redundant PPSR items.

Author, Blake Davis

The financial statements of a business rarely tell the full story. Reported earnings often include personal benefits, one-off items or structural decisions that make sense for the current owner but distort the true, sustainable profit of the business.

This is why normalisation adjustments are so important. By adjusting the historical earnings to reflect the underlying, sustainable, ongoing profitability of a business, they help establish the true maintainable earnings which is the number that ultimately drives valuation.

Why Normalisations Matter
Business owners often operate their businesses in ways that suit their personal circumstances but can significantly distort the profitability of the business. Personal expenses, over/under owner remuneration, one-off or abnormal costs, non-market property rent or strategic decisions suited to the owner’s situation may all suppress or inflate the earnings that buyers will use to value the business.

Proper normalisation provides a clearer view of the genuine maintainable earnings and positions the business for the strongest possible sale outcome for all parties.

When normalisation adjustments are done thoroughly and transparently, both buyer and seller benefit. The seller demonstrates the true value of the business and the buyer gains confidence in the sustainability of earnings.

Common Types of Normalisation Adjustments
When preparing a business for market, DMA reviews the financial statements in detail to identify adjustments across a number of areas. Common examples include:

Owner-Related Items

• Working and non-working owners’ remuneration (adjusted to market rates)
• Owners’ personal expenses (vehicles, travel, etc.)
• Salaries, superannuation or consulting fees paid to family members not working in the business

Non-Recurring or Non-Commercial Items

• One-off legal or accounting fees
• Unusual or abnormal bad debt write-offs
• Transaction costs associated with the sale
• Spending with no commercial benefit (Sponsorship, donations, discretionary expenses)

Accounting or Non-Operating Adjustments

• Depreciation and amortisation (to be replaced with capital replacement provision if using EBIT)
• Building write-offs
• Finance costs, interest, dividends
• Gains or losses from the sale of non-operating asset

Property and Leasing Adjustments

• Market rent corrections where property is owned by the vendor
• Internal rent or intercompany income
• Lease payments requiring reclassification or capitalisation review

Other Operational Adjustments

• Bank guarantee charges
• Borrowing expenses
• Hire purchase charges

Each adjustment contributes to a more accurate reflection of the business’s earning capability under new ownership.

How Adjustments Influence Valuation
Small adjustments can have a large impact on enterprise value.

For example, on a 4x EBITDA multiple every $100,000 of normalisation adjustment affects the enterprise value by $400,000.

If reported EBITDA is $2 million but normalised EBITDA is actually $2.5 million, the business may be worth $2 million more than initially expected. These differences can materially affect both buyer and seller outcomes.

DMA’s Approach to Normalisation Adjustments
At DMA, we recognise that the normalisation of the financial statements is critical to achieving optimal transaction outcomes.

Our approach involves a comprehensive review of financial statements well before a business goes to market, identifying and documenting every adjustment with a complete audit trail.

This rigorous preparation ensures that when we present a business to potential buyers the normalised earnings position is defensible, transparent, and credible. By proactively addressing normalisation before due diligence begins we eliminate surprises, reduce negotiation friction and position our clients to capture the full value their business deserves.

Whilst those in M&A readily talk about their successes, the reality is that not every business gets sold.

The reasons are many and varied, and they hold the key to what owners should do if they find themselves still on the shelf after a year or so of being on the market.

Although there may not necessarily be anything wrong, usually reasons can be found in one or more of the following areas:

1. Is something wrong with the business?
2. Is something wrong with the price?
3. Is something wrong with the way it is being marketed?
4. Is something peculiar about the industry the business is in?
5. Is it still too early to expect a result?

To help owners analyse their situation, here are some possible areas to explore under each of the above headings and suggestions as to what can be done about it.