The five primitives of liquidity

In the previous article we argued that the European SME succession market doesn’t have a price problem. It has an infrastructure problem. There is no shared, defensible truth on which seller, buyer, advisor and bank can negotiate. Without that, brokers stay expensive, marketplaces stay full of noise, and a third of transactions fail.

The next question is what such an infrastructure layer is actually made of. We have settled on five primitives. Each is a software problem in its own right; together they decide whether the market stays craft-built or becomes industrial.

Primitive 1: financial normalization

Almost every serious valuation discussion starts with the same question: what is the real EBITDA? And almost every discussion gets stuck on the same answer: it depends.

A Belgian or Dutch SME P&L is fiscally optimised. That is not a flaw; it is good accounting. But it is not economic reality. Two competent accountants on the same file can produce normalised EBITDA figures 15 to 25% apart, simply by making different choices on owner compensation, one-offs, non-operational items, working capital, capex and intercompany pricing.

On a €1M EBITDA business at a 5× multiple, that range is €750k to €1.25M of valuation uncertainty before any multiple discussion has happened. Buyer and seller can’t negotiate through that noise. Primitive 1 fixes this with one canonical normalisation engine: consistent rules, identical output, and an audit trail per item.

Primitive 2: algorithmic transparency

A defensible valuation is not the one with the best methodology. It is the one you can explain, reproduce and defend to someone who is not on your side of the table. Today, most SME valuations live in a single advisor’s spreadsheet, on a single tab of assumptions. The moment a buyer becomes critical, the structure tends to collapse. Not because the logic is wrong, but because it isn’t visible.

Algorithmic transparency means every step is explicit, every assumption logged, every parameter sourced, and the output’s sensitivity to each parameter is shown. Multiple methods in parallel, a coverage score for what the data supports, and an explicit defensible range. Not an opaque model.

Primitive 3: trusted advisors as distribution

The most attractive mistake infrastructure builders make is to assume they speak directly to the end user. For an SME owner in transition, that is rarely the path. ~80% of Benelux SME owners ask their accountant first what the company is worth. Not Google, not a marketplace. The person who has been doing the books for twenty years.

• The interface is for the advisor, not the owner. The advisor must be able to produce a defensible valuation in ten minutes, not build an Excel in half a day.
• Integration with existing tools is non-negotiable. Silverfin, Octopus, Yuki, Exact, Twinfield. Sit on top of them, don’t replace them.
• The methodology must defend the advisor, not replace them.

Primitive 4: shared reality

A tool produces an output for one party. Infrastructure produces an output that gives all parties the same view of the facts. In an SME deal, that means owner, buyer, advisor and bank work off one underlying data foundation, each at their own level. Disagreement remains, but shifts from facts to interpretation. That is a much more productive disagreement.

Primitive 5: buyer matching at scale

The first four primitives address the first half of the cycle. From "I think I want to sell" to "we have a defensible valuation everyone understands." The fifth solves the second half: getting from a valuation to an actual buyer.

Today this is a black hole. An owner in Antwerp selling a €4M production business often doesn’t know that a German strategic buyer has been searching for exactly this type of company in the Benelux for eight months. Demand exists; it just isn’t structured. Matching at scale means buyers register their search profile up front and the system matches inbound valuations against it. A structured demand engine, not a listings board.

How the five build on each other

1. Without normalisation, there is no consistent EBITDA.
2. Without consistent EBITDA, there is no defensible valuation.
3. Without defensible valuation, no advisor network adopts the tool.
4. Without an advisor network, there is no distribution.
5. Without distribution, there is no scale.
6. Without scale, there is no shared truth.
7. Without shared truth, there is no trust in matching.
8. Without matching, there is no liquidity.

Skip a primitive and the chain breaks. That is why Upswitch builds them in this order, not the order that pitches best. The layer of shared truth the primitives rest on is public: the Upswitch Index per business type, organised by country, with transparent methodology.