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A single EBITDA adjustment can look harmless until an independent Quality of Earnings review challenges it. What surprises many business owners is that buyers rarely remove the aggressive adjustments first. They remove the ones sellers believed were already settled.
Business owners often assume that if their company’s revenue and EBITDA remain strong, its value should remain unchanged. In reality, interest rates can significantly influence business valuation multiples, even when the business itself is performing just as well as it did a year ago.
Receiving a Letter of Intent (LOI) is an exciting milestone for any business owner. It signals that a buyer has expressed serious interest in acquiring your company and is willing to move forward with the transaction. However, many owners mistakenly believe that once the LOI is signed, the hardest part of the sale is over.
If you’re planning to sell your business-whether that’s next year or five years from now-one question should be at the top of your mind.
Selling a business isn’t just about finding a buyer-it’s about convincing them your company is worth paying a premium for. While many owners focus on growing revenue, experienced buyers look much deeper. Their attention quickly turns to one financial metric: EBITDA.
If you asked ten business owners, “How much is your business worth?” most would provide a rough estimate-or simply say they aren’t sure. Ironically, while many people know the value of their home, retirement account, or investment portfolio, they often have little understanding of the value of the largest asset they’ve spent decades building.
The statistics are not kind. Only about 30% of family businesses survive into the second generation, and fewer than 13% make it to the third. According to the Family Business Institute, the leading cause is not weak businesses — it is the absence of a formal, documented succession plan.
You spent years building something valuable. Now you are thinking about selling it — and someone just told you that most business owners leave 20 to 40 percent of their value on the table. That is not an exaggeration.
You built a manufacturing business that actually works. Now you are thinking about what comes next — retirement, a liquidity event, or putting the business in the right hands. The problem is that selling a manufacturing business is nothing like selling a service firm.
You are weeks into preparing your business for sale. Your advisor hands you a checklist: financial statements, contracts, compliance records, lease agreements. Hundreds of documents.
