Selling your Business

Assemble a team that may include your accountant/CPA, attorney, banker and a valuation specialist, plus other advisors as needed based on deal complexity and buyer type.

A valuation establishes a baseline rationale for your asking price and can highlight improvement areas that increase value before you go to market. Without a precise valuation you risk pricing too high (scaring off buyers) or too low (leaving money on the table).

Here is a list of multiple drivers: ownership changes/affiliation dynamics, divorce, strategic planning, estate and succession planning, securing financing, disputes/litigation, ESOP planning and share-based compensation strategy.

Buyers discount unclear numbers. Recommended steps include adopting GAAP consistency, reconciling every account, fixing historical inconsistencies and preparing at least three years of financials that tell a consistent story.

Many buyers value companies using a multiple of EBITDA, but they focus heavily on normalized EBITDA, earnings adjusted for non-recurring, owner-specific or unusual items to reflect sustainable run-rate performance.

Examples include: personal expenses run through the business, owner salary above market, one-time legal/consulting fees, gain/loss on a major asset sale and unusual vendor/customer settlements. The key is documentation – unsupported add-backs erode trust.

Working capital (cash, receivables, payables, inventory, etc.) often becomes a negotiation lever via a “working capital peg.” If you deliver less working capital at closing than the target, purchase price can be reduced. Analyze historical averages and prepare detailed schedules to avoid late-stage surprises.

If you’re selling to private equity, a strategic acquirer or another sophisticated buyer, QoE is commonly requested. Many sellers commission a sell-side QoE in advance to find issues early, speed diligence and support valuation. A typical cost range of $25,000 to $75,000 depending on size/complexity.

Common deal-breakers include inconsistent revenue recognition, customer concentration, margin compression, excessive/poorly documented add-backs, mismatches between tax returns and financial statements and manual processes with limited audit trail.

Your buyer might be internal (family member, key employees) or external (competitor, customer, broader market via an investment banker). Buyer type influences diligence rigor, deal structure and what “proof” they require.

Deal structure drives both tax outcomes and cash-flow realities (including earnouts and how debt is handled). This is a core modeling step, not a footnote.

“Emotional risk” is a real deal risk: diligence can feel personal, but buyers are managing investment risk. Staying objective, listening to trusted advisors and not treating diligence as criticism keeps negotiations on track.

Not always. There are generally post-acquisition obligations, especially during an earnout period, and the need to transition key relationships with employees, customers and advisors as the new owner brings changes in culture and technology.