How to Sell Your Business: A Founder's Guide to Preparing, Positioning, and Timing
The decision to sell a business is rarely simple. Founders who have spent years building something valuable face an overwhelming convergence of financial, emotional, and strategic considerations. The process itself can consume months of attention at precisely the moment when maintaining business performance matters most.
Yet despite these stakes, many founders approach a sale with inadequate preparation. They respond to inbound interest without understanding their company's true market value. They negotiate with a single buyer, unaware of how competitive dynamics affect outcomes. They accept deal structures that erode the headline price through earnouts, escrows, and working capital adjustments they never fully understood.
A structured approach to selling consistently produces better outcomes. Understanding the process, preparing appropriately, and engaging the right advisors transforms what could be a disappointing exit into a transaction that reflects the full value of what you have built.
The Cost of Selling Unprepared
Most founders sell a business once in their careers. Buyers, by contrast, acquire companies repeatedly. This experience asymmetry creates systematic disadvantage for unprepared sellers.
Consider what a professional buyer knows that most founders do not: how to structure working capital adjustments that reduce effective purchase price, how to negotiate earnout terms that shift risk back to the seller, how to use exclusivity periods to squeeze concessions, and how to time requests for information to maximise leverage.
According to SRS Acquiom's analysis of deal terms, working capital purchase price adjustments are now present on more than 90 per cent of private target M&A deals. These mechanisms, which reconcile actual working capital at closing against a target established in the purchase agreement, can materially affect what a seller actually receives. The average adjustment flows to buyers at roughly 0.9 per cent of transaction value. Founders who do not understand these mechanics often find their net proceeds differ from expectations.
Similarly, earnout provisions have become increasingly complex. SRS Acquiom data shows that earnouts pay approximately 21 cents per dollar across all deals, with 68 per cent of earnout deals including multiple metrics. A founder who accepts a $20 million headline price with $5 million in earnouts should expect to receive somewhere between $1 million and $2 million of that earnout component, not the full amount.
Timing Your Exit
The right time to sell depends on the intersection of three factors: market conditions, company trajectory, and personal readiness. Optimising across all three simultaneously is rare, which means founders must understand the trade-offs involved.
Market conditions influence buyer appetite and valuation multiples. According to Forvis Mazars' mid-market analysis, overall mid-market multiples averaged 7.2x TEV/EBITDA in 2025, with deals between $100 million and $250 million commanding approximately 10.0x. These aggregate figures mask significant variation by sector, growth profile, and deal structure. Selling into a favourable market can add meaningful value, but timing markets is notoriously difficult.
Company trajectory matters more than market conditions for most founders. Buyers pay for growth and stability. A company growing at 30 per cent annually with improving margins commands a premium over one growing at 10 per cent with flat margins, regardless of market conditions. The optimal time to sell is often when performance is strong and the path forward is clear, not when growth has stalled and challenges are mounting.
Personal readiness is the factor founders most often underestimate. Selling a business consumes enormous time and emotional energy. The process typically spans six to twelve months of active engagement, during which the founder must maintain business performance while managing due diligence, negotiating terms, and planning for life after the transaction. Founders who begin a process without genuine commitment to selling often sabotage their own outcomes.
Positioning for Maximum Value
How you present your business significantly affects how buyers perceive it. The same company can look like a growth platform or a mature asset depending on how its story is told.
Effective positioning starts with understanding what buyers actually value. Strategic acquirers look for synergies: customer overlap, product complementarity, geographic expansion, or technology that accelerates their roadmap. Financial sponsors evaluate cash flow predictability, growth potential, and management depth. The positioning that resonates with a strategic acquirer may differ substantially from what appeals to a private equity firm.
Key metrics deserve particular attention. Revenue quality matters more than revenue quantity. A business with 90 per cent recurring revenue, net revenue retention above 100 per cent, and low customer concentration will trade at a premium to one with project-based revenue and high churn, even if the headline numbers are similar. Before going to market, founders should understand how their metrics compare to acquisition targets in their sector and address weaknesses where possible.
Financial presentation requires care. Buyers will normalise your financials during due diligence, adding back one-time expenses and removing personal benefits that inflate costs. Presenting a properly normalised picture upfront, with clear explanations and supporting documentation, builds credibility and prevents price reductions later in the process.
Running a Competitive Process
The single most important decision in selling a business is whether to engage multiple potential buyers or pursue a proprietary transaction with a single acquirer.
Research from Focus Bankers indicates that competitive sales processes can result in 50 to 100 per cent increases in offers compared to proprietary sales. This uplift reflects basic economics: when multiple buyers compete for an asset, they bid against each other rather than against the seller's reservation price. The seller captures value that would otherwise accrue to the buyer.
A competitive process creates leverage at every stage of the transaction. During initial negotiations, sellers can reference competing interest without revealing specific details. When one buyer makes aggressive requests, the presence of alternatives provides credible pushback. If negotiations stall, pivoting to another interested party becomes a realistic option rather than an empty threat.
The mechanics of running a competitive process require expertise. Identifying the right universe of potential buyers, staging information release appropriately, managing parallel conversations, and orchestrating a timeline that maintains competitive tension while not exhausting the seller all require experience that most founders lack. This is the primary reason that engaging a sell-side advisor typically pays for itself many times over.
Understanding Deal Structure
The headline purchase price is the beginning of understanding deal economics, not the end. How that price is paid, adjusted, and contingent upon future performance determines what the seller actually receives.
Cash at closing represents the cleanest form of consideration. When a buyer pays cash, the transaction is complete. The seller bears no further risk related to the buyer's performance, integration success, or future events. Most sellers rationally prefer maximum cash at closing, even if it means accepting a lower headline price.
Earnouts tie a portion of the purchase price to post-closing performance. They bridge valuation gaps by allowing sellers to participate in the upside they believe the business will achieve. However, earnouts also create ongoing obligations, potential disputes about measurement, and dependency on decisions the seller may no longer control. Given that earnouts pay approximately 21 cents per dollar on average, sellers should heavily discount earnout components when evaluating offers.
Escrows and holdbacks set aside a portion of proceeds to cover potential indemnification claims. These mechanisms protect buyers against undisclosed liabilities, breaches of representations, and other post-closing claims. The median survival period for general representations typically runs twelve months, meaning sellers may have funds at risk well after closing.
Working capital adjustments reconcile actual working capital at closing against a target specified in the purchase agreement. These adjustments are now virtually ubiquitous and can move meaningful value between buyer and seller. Understanding how working capital will be measured, what normalisation adjustments apply, and how disputes will be resolved requires careful attention during negotiation.
The Timeline Reality
Founders consistently underestimate how long transactions take. The typical exit process spans six to nine months from engaging an advisor to signing a purchase agreement, followed by additional months of due diligence, regulatory approvals, and closing mechanics.
BCG research on M&A timelines found that approximately 40 per cent of transactions take longer to close than the timeline estimated in the deal announcement. Among delayed deals, nearly two-thirds require an additional three months or more beyond the original timeline. These delays occur for many reasons: due diligence complexity, financing contingencies, regulatory review, and simple negotiation friction.
Planning for a longer timeline has practical implications. Business performance must be maintained throughout the process, which means founders cannot check out mentally or deprioritise operations. Earnouts often reference performance periods that begin at closing, making post-signing performance as important as pre-signing. And personal plans, whether retirement, starting a new venture, or simply taking a break, must accommodate uncertainty about when funds will actually arrive.
The extended commitment required is a key reason why exit readiness matters. Founders who have built management teams, documented processes, and created businesses that can operate without their daily involvement are better positioned to sustain performance through a lengthy transaction process.
Engaging the Right Advisors
Selling a business requires expertise in transaction execution, deal negotiation, and buyer relationships that most founders simply do not have. The question is not whether to engage advisors but how to select the right ones.
Sell-side M&A advisors, often called investment bankers, manage the sale process. They identify and contact potential buyers, prepare marketing materials, facilitate due diligence, and negotiate terms. Their value comes primarily from running competitive processes that generate multiple offers and from experience navigating the complexity of deal terms.
Fee structures for advisors typically combine a monthly retainer with a success fee calculated as a percentage of transaction value. For mid-market transactions, success fees commonly range from 2 to 5 per cent, with percentage declining as deal size increases. The competitive process uplift that good advisors generate typically exceeds their fees by a substantial margin.
Beyond investment bankers, founders should engage legal counsel experienced in M&A transactions and, often, accountants who can prepare the company for due diligence and advise on tax optimisation. These professionals work together throughout the process, and selecting a team that has collaborated previously can reduce friction.
The most important criterion in selecting any advisor is relevant experience. An advisor who has completed multiple transactions in your sector, at your company's size, with your type of buyer universe will add more value than a prestigious firm whose relevant experience is thin. References from founders who have completed similar transactions are invaluable.
Moving Forward
Selling a business well requires preparation, positioning, and process discipline. Founders who understand what buyers value, how competitive dynamics affect outcomes, and what deal structures really mean are better equipped to achieve results that reflect their company's true worth.
The gap between prepared and unprepared sellers is substantial. A competitive process can double the outcome compared to a proprietary sale. Proper understanding of deal structures can prevent erosion of the headline price through earnouts, escrows, and adjustments. And realistic timeline expectations can prevent the business disruption that comes from premature celebration.
If you are considering selling your business and want to understand how preparation might affect your outcome, we welcome a confidential conversation about your situation.