The Ten Commandments of Selling Your Business
August 8, 2019

Tad Render and Domenic Rinaldi

The sale of your business is often a significant life event. The tips below will help you through the process and maximize the value of your business.

1. Thou Shall Understand Goals and Objectives 

Ask yourself what you are trying to achieve by selling your business. Is it financial security? More time with the family? To see your business grow to the next level? All of these questions, and many more, must be answered before starting down the sale process. For example, maybe financial security can be achieved through a debt recapitalization which means you don’t need to sell at all. Alternatively, if you want to spend more time with the family, maybe selling to a private equity group is not the best option as they will likely want you to continue working for a while.

2. Thou Shall Plan Ahead

Plan the sale of your business to maximize value but before a situation arises that forces a sale. Are you close to landing that next large customer? Can you open that next location to further boost earnings? If so, you may want to defer talking to buyers. However, it is important to continue to plan for the eventual sale of your business.

3. Thou Shall Hire an Intermediary

When the typical homeowner decides to sell their home, the first person they call is a realtor. However, many times small business owners look to sell their business without a sell-side intermediary. Having an intermediary with experience in your industry will be invaluable. Among other things, a business broker can find a buyer, structure the transaction, negotiate the sale, and most importantly, allow you to continue to focus on running the company.

4. Thou Shall Prepare for a Long Process

There are many steps both a buyer and seller must navigate during the transaction…and all take time. Often a buyer will be performing significant due diligence on your company and may stage those due diligence efforts over a period of time. For example, a buyer may not want to engage legal counsel until the buyer has confirmed the underlying earnings and come to terms on valuation. Another time constraint is typically the buyer’s lender who must perform their own underwriting process. Although there are always exceptions, the sale process for a small business can take upwards of six months.

5. Thou Shall Make Sure Your Books and Records Are in Order

Preparing for sale involves making sure your corporate records are in order. For example…Are agreements with other owners documented? Are corporate registrations and business licenses in good standing? Are contracts with key customers or suppliers memorialized? Are employment agreements current? Many of these items fall by the wayside in small businesses but are all critical to have in order to maximize the value of your business.

6. Thou Shall Hire Experienced Professionals

Hiring accountants and attorneys that are well versed in mergers and acquisitions will bring a wealth of knowledge to the transaction. These professionals can help manage the sale process and strategy. An experienced deal accountant can make sure your financials can stand-up to the scrutiny of a buyer and help calculate after-tax cash flow. An experienced deal attorney can help negotiate the purchase and sale agreement and protect you from representations and warranties claims and future indemnity risks. Ideally these professionals have prior experience representing buyers which enables them to bring a different perspective to your transaction.

7. Thou Shall Present Your Financial Statements in the Best Light

Most transactions in the lower middle-market are valued based on a multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA). Accordingly, making sure your earnings are presented in the best light will maximize value. An experienced deal accountant can help identify and quantify adjustments to EBITDA such as one-time expenses and out-of-market items. In addition, a buyer will want to ensure your financial statements comply with accounting principles generally accepted in the United States of America (US GAAP).

8. Thou Shall Disclose Everything

If you or your business has issues that need to be addressed, up-front disclosure to the buyer is always best. Nothing good can come of sweeping the issue under the rug. For example, if there is a potential product liability problem, early disclosure can keep the transaction on track. Disclosing issues can keep the seller safe from breaching a representation and warranty made to the buyer as part of the purchase and sale agreement. Think of issues as just another negotiation lever in the transaction.

9. Thou Shall Evaluate All Buyers and Offers

Potential buyers and their offers for your business can come in many shapes and forms. Evaluating each buyer early in the process can avoid problems down the road. For example, if the legacy of your business and employees’ futures are important to you, selling to a strategic buyer who may roll your operations into a corporate parent may not be the best buyer. Additionally, if you will be rolling equity into the acquirer, it is critical that you get along with your new partner. Sure you may want to sell your business for all cash at closing, but for many reasons, a buyer may want to structure the transaction differently. For example, a buyer may wish to have you finance a portion of the sale or pay you some cash at close and additional earnout consideration based on future profitability or other metrics.  Understanding the buyer’s reasons for their offered structure (and current market trends for a business of your size in your industry) are important considerations when evaluating offers. Dismissing one buyer’s offer because it is not the highest price may be a mistake in the long-run.

10. Thou Shall Focus on the Business

Hopefully you have created a business worthy of many offers. However, it is important that you continue to operate the business throughout the sale process. Deals fall through for many reasons and if you have neglected the business during the sale process the buyer will be disappointed and even worse you may be left picking up the pieces should the transaction not close.


If you are contemplating the sale of your business, the above Ten Commandments can help expedite the process and maximize the value of the business you have built.

Tad N. Render, CPA leads the Transaction Advisory Services practice at Miller, Cooper & Co., Ltd., a Chicago-based accounting and consulting firm. The Transaction Advisory Services group specializes in buy-side and sell-side financial and tax diligence and related quality of earnings work.

Domenic Rinaldi is the Managing Partner of Sun Acquisitions – a Chicago-based mergers & acquisitions firm specializing in representing lower middle market companies for sell-side and buy-side transactions. Domenic also hosts the popular podcast – M&A Unplugged. 

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