“A good traveler has no fixed plans and is not intent on arriving.”

– Lao Tzu, Chinese Philosopher

Thanks for reading The Art of the Exit: The Complete Guide to Selling a Business. Whether you plowed through the entire book or zeroed in on specific chapters, whether you’re ready to sell now or are considering doing so, I trust you found a realistic and helpful depiction of what you can expect to happen during the process.

Most business owners will hire a business broker, M&A advisor, or investment banker to sell their company – as well they should. But your knowledge of how to prepare for the sale before you even join forces with an intermediary will help you ask the right questions, choose the right advisor, and maximize the value you can receive for your business. By taking advantage of the knowledge gleaned during my more than two decades of buying and selling businesses, you’re already a step ahead of the game.

Let’s review a few of the high points, starting with some of the preliminary considerations and factors to know and be ready for: 

  • Deciding whether you should sell your business is a personal decision that should be based on your values.
  • Preparing your business for sale and building a valuable business takes time. The sooner you begin the process, the better.
  • Valuing your business has several components. The ranges of value for a business are wide, primarily because perception of value of a business varies considerably from buyer to buyer.
    • The first determination is whether to use SDE or EBITDA to value your company.
    • 95% of businesses will be valued based on a multiple of SDE or EBITDA and fall within a range of 20% to 50%.
    • An experienced intermediary can advise you regarding the range of possible values for your business.
  • Building a team is critical. Your broker and attorney will play the major roles.
    • For smaller transactions, your attorney will be less involved unless you are negotiating with a direct competitor or institutional investor, which is less common for smaller businesses.
    • For mid-sized and larger businesses, your attorney will play a critical role in the transaction.
    • Make sure your financial statements are squeaky clean. Ask your accountant to clean up your financials before the sale or hire a third party to review them.

Next up: Buyers. Knowing the type of buyer likely to be interested in your business will save you time and money getting your message across.

If your company earns less than $500,000, for example, it will likely sell to an individual. If that’s the case, you should take the appropriate measures to maximize the net income on your financial statements, as this will significantly improve the buyer’s ability to obtain a Small Business Administration loan. If you’re selling a business with EBITDA greater than $2 million, you’ll likely be dealing with an institutional investor, as they have the cash and more access to financing. Businesses with EBITDA from $500,000 to $2 million may sell to either an individual or an institutional investor. In any case, your intermediary will be able to apply the right targeted approach to attract the buyers most suitable for your business.

Confidentiality is a legitimate concern when dealing with buyers. Key sales documents should be prepared and released to buyers in stages. Your intermediary will have a template NDA, but you should have your attorney prepare a custom NDA if you will be selling your business to a direct competitor and have specific concerns that a standard NDA doesn’t address. Your broker will also handle the screening of buyers and prepare a confidential information memorandum (CIM).

Now, for another fun part of the process: Meeting the buyer.

  • By the time you talk with a buyer, they will have been screened and received information on your business in the form of a CIM and adjusted financials. With these meetings, buyers are seeking to learn more about your company – and you.
  • The critical part of these meetings is maintaining negotiating leverage. You should be motivated to sell but not desperate or in a hurry. Always maintain your options.
  • By preparing in advance, you will have confidence that your business is bulletproof and that there are no undisclosed problems. Send the message to the buyer that you are prepared; importantly, this can help justify a shorter due diligence period.
  • Maintain emotional objectivity. Let your intermediary handle all negotiations. 
  • Don’t take your hands off the wheel. Focus on running your business regardless of how well you feel your meetings went. 

When an offer is forthcoming, get your attorney involved in the negotiations unless the buyer is an individual who is comfortable using your broker’s template. Rely heavily on the advice of your intermediary and attorney while negotiating the deal structure.

What’s next? Due diligence. Here are some keys:

  • By preparing for the sale in advance, you can often negotiate a shorter due diligence period, which helps you maintain your negotiating leverage.
  • By preparing for due diligence, you speed up the process and reduce the chance that the buyer will discover material problems, which they can use against you to renegotiate the price or terms.
  • If due diligence unfolds smoothly, which it should if you are prepared, there should be few surprises in the first draft of the purchase agreement.

All of which leads to the closing. The key here is to maintain your emotional objectivity. Your attorney should be deeply involved in negotiating the purchase agreement. But be on guard – a deal can still die at any minute for literally hundreds of reasons.

For most owners, the closing is an anticlimactic event – a simple formality. But it represents years of painstaking dedication and hard work. Congratulations! There won’t be a defining moment when you realize you reached the finish line, but one day you will wake up and realize the finish line is well behind you.

Thank you for turning to Morgan & Westfield for your M&A information needs. You made the right choice. 


Jacob Orosz

President of Morgan & Westfield (

Host of M&A Talk – The #1 Podcast on Mergers & Acquisitions