Preface

“An entrepreneur is someone who will work 24 hours a day for themselves to avoid working one hour a day for someone else.”

– Chris Guillebeau, American Author and Entrepreneur

Selling your business will be one of the most stressful events in your life, period. Make no mistake about it – selling a business is not an easy task. Nor can you hire an expert and expect them to handle the entire process for you without an immense amount of effort on your part. Not only is the process stressful, it is also tremendously complex and filled with potential landmines and other setbacks.

When I began helping entrepreneurs sell their businesses over 20 years ago, I scoured the market for useful information on the topic. Once I started my career, I discovered that most of this knowledge did not deal with many of the real-world problems I encountered when helping my clients sell their businesses. Rather, it was theoretical knowledge or was directed at large, publicly traded companies. Many of the books available on the topic were a random collection of insights that were difficult to apply in the real world.

I wrote this book for owners of companies valued from $500,000 to $10 million – or companies with earnings before interest, taxes, depreciation, and amortization (EBITDA) of $200,000 to $3 million per year. This size range tends to be a no-man’s land for most business owners. That’s because most business brokers may not be equipped to deal with a million-dollar transaction, while the majority of M&A firms are accustomed to handling much larger transactions. Another challenge for businesses in this size range is that the potential buyer can be either an individual or a corporate buyer, such as a competitor, private equity firm, or other company. The issue here is that the marketing strategies, negotiating tactics, and processes can be significantly different for these two groups of buyers. 

Whether you are searching online for general guidance or browsing books for a useful, concise description of the sale process for companies in this size range, you will have difficulty finding valuable, actionable information. To be sure, there is a lot of theoretical intelligence out there that is specifically helpful for academics. However, if you own a small business with less than $10 million to $30 million in annual revenue, most of the advice in these books will not be useful to you. Additionally, most books on the topic are written by academics, accountants, attorneys, financial planners, or business appraisers who have theoretical knowledge but may not necessarily have real-world experience selling businesses. 

This book offers a solution. If you are looking for clear, concrete, and practical advice grounded in real-world experience, you’ve come to the right place. These pages walk you through the entire sales process and offer advice based on my decades of experience helping entrepreneurs successfully sell their businesses. 

How This Book Can Help You 

Selling a large, established $500 million company requires an entirely different process than selling a small to mid-sized business. This book is written for owners of both Main Street and lower middle-market businesses valued at $500,000 to $10 million, or approximately $1 million to $30 million in annual revenue or $200,000 to $3 million in EBITDA – these are the small companies in America that keep our economic engine running. They are the service companies, manufacturing businesses, professional service firms, technology companies, construction businesses, wholesale or distribution businesses, manufacturers, small professional practices, medical practices, and other small businesses with fewer than 500 employees. 

Through my years of experience devoted exclusively to helping people buy and sell businesses, I realized that most business owners do not want answers to technical questions such as how to allocate the purchase price between the various assets. Rather, they want straightforward answers to basic questions such as:

  • How long will it take to sell my business?
  • What is my business worth?
  • Should I tell my employees I am considering selling my business?
  • Do I need to prepare my business for sale, or can I put it on the market now without advanced preparation?
  • Should I finance a portion of the price? What if the buyer defaults?
  • Who is most likely to buy my business?
  • Should I take my business off the market when I accept an offer?
  • What should I do if the buyer refuses to sign a non-disclosure agreement?
  • What documents do I need to prepare before I put my business on the market?
  • Can I sell a portion of my company?
  • Do I need a business appraisal?
  • Can the buyer get a bank loan to buy my business?
  • How do I find and hire a broker, M&A advisor, or investment banker?
  • What should I look for when signing an agreement with a broker or M&A advisor?
  • What is the difference between an offer and a letter of intent?
  • How can I prepare for due diligence?
  • Does my attorney need M&A experience?
  • What is escrow? 

In this book, I offer practical advice that even the busiest entrepreneurs can apply in their hectic lives. I also want to note that I wrote this book not only for sellers, but for anyone involved in the M&A process, such as buyers, attorneys, accountants, and business appraisers. For the sake of clarity, however, I address sellers directly throughout the book, but I wrote this book with all of you in mind.

As the incomparable Mark Twain once said “Twenty years from now, you will be more disappointed by the things that you didn’t do than by the ones you did do, so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails. Explore, dream, discover.” 

Sincerely,

Jacob Orosz