Selling a business is rarely as simple as agreeing on a price. How that price is paid, the deal structure , can dramatically affect how much money a seller actually receives, when they receive it, and how much risk they continue to carry after closing the deal. There are many factors that determine what terms a seller receives. By far the most important factors are 1) the unique characteristics or value of the company itself, and 2) how effectively the sale process encourages

Buyer competition turns a business sale into a market. And markets, unlike individual buyers, rarely underpay. Creating competition for your business isn’t just about securing the best price and terms, it’s about actually closing a deal. Buying a company is expensive and risky, and deals often fall apart before they close. But a buyer who has successfully navigated a competitive sale process is far more likely to follow through on their offer and close the deal they agreed to

Most business owners imagine that when they sell their company, they’ll receive the full purchase price in cash at closing. In reality, that almost never happens, especially in the lower middle market (companies valued between roughly $3 million and $50 million in annual revenue). Buyers frequently structure deals so that a portion of the price is deferred. This not only aligns post-closing incentives between buyer and seller but also makes the acquisition more financially fe

When you sell your company, you might not have to sell all of it. In many sales, especially those involving private equity buyers, the buyer may ask you to “roll over” some of your ownership into the new company. That’s called rollover equity. It means you take part of your sale price in the form of ownership in the buyer’s new company instead of cash. You still get a big payout, but you keep a piece of the business and stay invested for the next chapter. Why Buyers Propose R

When it comes to structuring a business sale, every business owner wants to be paid in full at closing and every buyer wants to limit risk and conserve cash. The tension between those conflicting goals is often resolved through an earnout.   Earnouts are most common in life science and technology industries, due to inherent uncertainties around regulatory approvals, clinical trials and high growth potential. In manufacturing and services industries, earnouts can usually be av

Business sellers need to understand that buyers expect a normalized level of working capital to be included in the sale. Negotiating working capital targets and formulas are an important part of any sale process because the final purchase price will be adjusted up or down depending on the working capital actually delivered at closing.

You’ve spent years building your business — taking risks, solving problems, and creating something of value.  If you want to maximize...

Selling your business is not a do-it-yourself project. Should you use a business broker, M&A advisor or an investment bank?

A valuation technique for small businesses is the multiple of EBITDA formula. This article explains how to use it properly.

You got “The Call”. Someone wants to buy your company! You're flattered and excited. You might even be thinking about selling, and you...

Owners who want to sell their businesses to management—specifically, key employees - face two unpleasant facts: Their employees have no...

In a business sale process, the Letter of Intent (LOI) is a non-binding agreement that defines the high-level terms of an acquisition.

In a business sale process , a merger and acquisition advisor (M&A advisor) will request an Indication of Interest (IOI) from potential...

This article describes ten deal pitfalls, in no particular order, that can derail a business sale. All of these pitfalls are fairly...

Selling Your Business Right The First Time. The sale of your business represents the culmination of years of sacrifice and hard work....

“Merger and Acquisition Broker” (M&A Broker) is a relatively new category of business intermediary originally defined by the Securities...

Selling a business successfully requires the same level of planning and effort that it took to build it, but the stakes are higher.

Selling a business requires the same planning and commitment that starting a business required - except that there is more at stake. This...