The Do’s and Dont’s of Selling Your Business

Before You Sell

There are a handful of elements that are fundamental to positioning a company for a sale. It is well worth a business owner’s time upfront to understand these elements.

– Don’t force an owner-operator situation by making yourself irreplaceable or indispensable. It narrows the pool of buyers tremendously.

– Don’t borrow a bunch of money – especially right before you sell. Over-leveraging is a real problem and will reduce the amount of cash a seller walks away with at closing. Your debt ratio will be examined closely. The potential buyer must calculate enough cash flow to satisfy debt service and their desired investment income.

– Don’t tell your employees. I know this sounds counter-intuitive but it can cause unnecessary strain on the employees and business as a whole. Numerous transactions have been sidelined by key employees.

– Do make sure your books are up to date. If you wait until the end of the year to do your bookkeeping, your business broker will not be able to complete the in-depth financial review, analysis, and repacking that is required.

– Do have conversations with partners and family members that the sale may affect. Share your intentions and plans with your spouse and children, especially if they may have envisioned their own long-term gain from the business. Similarly, if you are planning to sell and retire so that you can be more present with your family, make sure they are on the same page and you all are preparing for a new cadence to life.

– Do review your contracts with vendors and clients. Longer-term contracts are always preferred by a buyer as evidence of consistent, recurring revenue. The ebb and flow of gaining and losing contracts is not the basis of a valuation. Rather, buyers need long term proof of revenue. Re-occurring revenue should be regular and increasing over a period of years. Project revenue can differ. Overall, up and down is not preferred to slow and steady growth.

During the Sales Process

The sales process can be stressful for many owners. In addition to having a business broker who is attentive and trustworthy (like me and the team at Calder!), understanding some points of contention and differentiation will ensure a much more positive experience.

– Don’t wait. A quicker sale is better – remember that no future is guaranteed. A buyer tomorrow with cash in hand is much better than a potential buyer who needs financing 6 weeks from now or 2 years from now.

– Don’t fluff or inflate your company’s value short-term. It will be vetted and exposed for its true current value.

– Do continue to operate your business in as normal of course of action as possible.

– Do manage your expectations. Calder will provide a valuation analysis and potential sale price range, but the best-case scenario is not always likely. For example, if a stated range is $800,000-$1.2MM, it is a poor choice to hold out for the highest value. You will likely see something more in the middle, like $1MM. Recognize that the perfect buyer may not be out there.

– Do provide a true representation of how COVID has affected the business – not just a narrative, but in-depth numbers. This likely means a review of the TTM (Trailing Twelve Months) plus a comparison of March 2019 through October 2019 to March 2020. Buyers want to see the dropoff, then recovery if the company has been affected.

– Do clean and tidy your space if you are showcasing your physical offices and facilities to a prospective buyer. You only have one chance for a first impression.

Never, Ever

There are three very specific areas that will completely derail a sales process for any company, with little hope of reconciliation.

– Don’t judge potential buyers by their race, religion, or sexual orientation, only by their financial ability and experience to continue the legacy you have built.

– Don’t belittle your employees.

– Don’t misrepresent information to your broker or a potential buyer.


While this list of Do’s and Dont’s is not comprehensive, failure to explore any of the above areas can severely impact the sale. My role as a business broker is to help my clients prepare for the sale, to manage the entire sale process, and to celebrate their achievement when they achieve their goals. Only through transparency is this possible.

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Shane Kissack is a principal at our Chicago Metro office and can be reached here.

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