FAQ

My customers send purchase orders, not contracts. Does that matter?

Direct answer

It matters to the multiple. Releases against a non-binding forecast are normal in automotive and industrial supply, but a buyer underwrites them as weaker than committed volume, and the presentation should be honest about which you have.

More detail

What partially substitutes for contractual commitment is evidence of durability: order history by part over several years, qualification and tooling positions that make switching expensive, sole-source designations, and supplier scorecards showing consistent performance. Presented together, that record can support a strong valuation even without long-term agreements. What damages a process is describing rolling releases as contracts and having diligence discover otherwise, because the credibility loss affects every other representation the seller has made. Where long-term agreements do exist, their terms need reading before they are presented as an asset: annual price-down clauses reduce the margin the buyer is paying a multiple on.

Authoritative sources

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