Are You Ready to Sell Your Business?

Cash-basis books need conversion. Accrual gives buyers a true picture of revenue timing and obligations.

Car payments, family cell phones, personal travel — anything personal needs to be clearly identified as add-backs or removed entirely.

Declining revenue scares buyers more than anything. If trending down, address the cause before going to market.

Customer concentration is a top deal-killer. Buyers see it as a risk that walks out the door.

Subscriptions, retainers, long-term contracts. Predictable revenue commands higher multiples.

Discrepancies between tax returns and internal financials are a red flag in due diligence.

Credit lines, equipment leases, SBA loans, vendor financing — everything must be disclosed.

Buyers will negotiate a working capital target. Know your seasonal needs and normal levels.

This is the #1 value driver. Test it by taking a 2-week vacation without checking in.

Sales, fulfillment, customer service, finance, HR — written procedures that someone new could follow.

Stay bonuses, equity, or employment agreements that survive the sale. Buyers want to know the team stays.

Key-person risk applies to star salespeople, technical leads, and relationship managers.

Outdated systems, tribal knowledge in spreadsheets, and undocumented integrations scare buyers.

Review contracts for change-of-control clauses. Some vendors require consent to transfer.

Favorable lease with 5+ years remaining, or owned property. Short or above-market leases hurt value.

Patents, trademarks, copyrights, trade secrets — if they're in a founder's name, they don't transfer with the sale.

Active lawsuits must be disclosed and often must be resolved before closing.

Review every major contract for assignment clauses and change-of-control triggers.

Key employees should have agreements. Note: non-competes are generally unenforceable in California.

Industry-specific licenses (contractor, healthcare, financial, food service) often require new applications post-sale.

Outdated governing documents create confusion about authority to sell.

Manufacturing, real estate, and chemical businesses need Phase I/II assessments.

Owners without a post-exit plan subconsciously resist closing. Have a concrete plan.

After taxes and fees, will the after-tax proceeds fund your lifestyle? Run the numbers.

Family members who aren't aligned can derail a sale at the worst moment. Have the conversation early.

The business is your identity. That's not a weakness, but it needs to be acknowledged and managed.

Asset sale vs stock sale, installment sale treatment, Opportunity Zone investment, charitable remainder trust — plan 1-2 years ahead.

Most buyers require the seller to stay for a transition. If you want a clean break on day one, your buyer pool shrinks significantly.

Are similar businesses selling? At what multiples? Know your market before listing.

Higher rates mean buyers can afford less. This affects your valuation directly.

List when financials look strongest. Trailing twelve months should show your best performance.

Upcoming regulation creates uncertainty that buyers price into their offers.

Buyers pay premiums for businesses with moats — brand, patents, exclusive contracts, network effects.