Advice on Selling a Business: 5 Surprising Lessons I Learned From Experience

Dave Durand
Thu, 26 Dec 2024 14:00:04 +0000
Selling-business, Advice, Building-and-selling, Entrepreneurship, Growth-strategy, Lessons-learned, Personal-development, Sell-your-company, Selling-a-website, Selling-your-business, Selling-a-business

Building and selling businesses is a complex, sometimes overwhelming process. Over the years, I’ve had the privilege of building and selling multiple companies, each presenting unique challenges. However, certain lessons have emerged from each experience that stand out.

In particular, I’ve learned that entrepreneurship is as much about understanding human psychology and business dynamics as it is about the mechanics of running a company. Here are five key lessons I’ve learned throughout this journey.

Lessons Learned From Selling Businesses

1. Not Everyone Will Value Your Business the Same as You

As entrepreneurs, we often feel emotionally attached to our businesses, almost as if we’re parents looking at a child’s artwork on the fridge. It’s natural to believe that our business is the best, the most innovative, or the most important. But here’s the truth: your opinion about your business is not as relevant as you might think when it comes time to sell.

Potential buyers—whether they’re individual investors, other companies, or private equity firms—will look at your business from a completely different perspective. They don’t see it with the same emotional attachment that you do. They evaluate it through the lens of their own goals, their need for a return on investment, and how it fits into their portfolio.

The sooner you accept that buyers won’t see your business as your "baby"—and that they will have a set of cold, hard metrics they’ll judge it by—the better. Getting the best valuation means aligning your vision with what the market finds valuable. This involves getting real about the numbers, the potential for growth, and whether you’re offering something buyers truly want.

2. If You Don’t Have Your Finances, Processes, and Strategy for Growth in Order, You Aren’t Ready to Sell

I’ve seen too many entrepreneurs jump into the sale process without taking the time to get their house in order. Without solid financials, clear business processes, and a growth strategy, you aren’t in a position to sell—not at a premium, at least.

The first step before even thinking about selling is to ensure that your company’s financials are clean, transparent, and up-to-date. Buyers will dive deep into your books, and any discrepancies or inconsistencies can be a red flag. A company with well-organized finances demonstrates that the business is ready for scale, making it an attractive acquisition target.

Additionally, you must have your business processes streamlined and your strategy for growth clearly articulated. Buyers want to know that the company is operating efficiently and has a clear path to continued success post-sale. If your business is dependent on you, the founder, and lacks a system or team in place to carry it forward without you, buyers may hesitate.

3. Private Equity Teams Want Short, Objective Answers, Not Long Emotional Explanations

Private equity (PE) firms are in the business of making money. When they’re evaluating a business for acquisition, they want straightforward, objective information. They don’t need a long-winded narrative about how passionate you are about the company or your personal history with it. What they care about is the data and the facts: How much revenue do you generate? What is your profit margin? What is your customer retention rate?

In my experience, I’ve seen many entrepreneurs get caught up in the emotional side of things, thinking that sharing the journey of the business and how much effort they’ve put in would sway the decision-makers. It doesn’t. What PE firms value most are concise, hard-hitting answers about the company’s financial health and growth potential.

If you’re preparing to sell your business, practice being succinct and focused on the numbers and key business metrics that drive value. The less emotional attachment you show, the more professional and attractive your business will seem to potential buyers.

4. When You Get an LOI with Huge Valuation Multiples, Be Cautious

Receiving a letter of intent (LOI) with an eye-popping valuation can be incredibly exciting. It’s easy to get swept up in the idea of a major windfall. But here’s the thing: a big valuation often isn’t the full picture—it may be a strategy to get you mentally committed to the idea of selling, and potentially make you more willing to accept lower offers as the deal progresses.

Private equity firms and larger buyers may use high valuation multiples to get you hooked. It’s a psychological tactic. Once you mentally start thinking about how you’ll spend the proceeds, what new house you’ll buy, or the yacht you might finally afford, your judgment may start to waver. After a deeper dive into the actual terms of the deal, you might find the numbers don’t line up with the initial promises.

If you see a large valuation, it’s crucial to carefully assess the entire deal structure—don’t just focus on the headline number. Valuations often come with caveats, contingencies, or other factors that can significantly lower the deal value once everything is finalized. Keep your emotions in check and evaluate the deal on its real terms, not on what it promises in your dreams.

5. Have an Exit Plan—And Be Ready for the Void After the Sale

This is one of the most overlooked aspects of selling a company: the emotional and psychological void that comes after the sale. Too many founders think that the sale itself is the end of the journey, but in reality, it’s often just the beginning of a new challenge.

I've been fortunate enough to have exit plans in place, which helped me transition smoothly after the sale. However, I’ve seen many of my friends and fellow entrepreneurs struggle with the emotional void that follows. When your entire identity and purpose have been wrapped up in the company, selling it can leave you with a feeling of emptiness. Many founders find themselves shocked by this emotional void, leading to post-sale depression, confusion about what comes next, and a sense of aimlessness.

That’s why it’s crucial to have an exit plan—not just a business plan, but a life plan. Know what you want to do next. Maybe it’s starting a new venture, getting involved in a different industry, or even taking time to travel or give back. Don’t sell just to escape your old life—run toward something new. It’s essential to have a plan for your next phase to avoid feeling lost after the sale.

Selling Businesses Is a Complex, Sometimes Overwhelming Process

Selling a business is a deeply complex and personal process. It’s not just about securing the right price or finding a buyer—it’s about understanding the intricacies of human psychology, managing your emotions, and making sure you’re prepared for what comes next.

These five lessons have been invaluable to me, and I hope they help you navigate your own entrepreneurial journey with a clearer perspective and greater success.

About the Author

Post by: Dave Durand

Dave Durand is currently the CEO of Leading Giants and executive chairman of Best Version Media. With over three decades of hands-on experience in leadership and entrepreneurship, Dave is a sought-after authority in personal development, business coaching, and influence mastery. He has built and sold multiple companies, collectively generating over one billion dollars in sales across industries including media, digital services, and leadership training. Over the course of his career, Dave’s leadership culture and focus on humility have earned recognition from major organizations, including Glassdoor, Fortune, Great Place to Work, and Top Workplaces USA.

Company: Leading Giants | Best Version Media
Website: www.leadinggiants.com