what business owners tell us they care most about

In the absence of a clear succession plan, owners often consider private equity groups or business brokers to sell their businesses, each with their own merits and drawbacks. However, neither model always aligns perfectly with an owner's needs.

Advantages of Private Equity: Private equity groups can offer higher purchase multiples, often surpassing what an employee, family member, or individual investor could provide with traditional bank financing. Their expertise in rapidly growing a company's value is a key advantage.

Disadvantages of Private Equity: Despite the attractive multiples, private equity deals often come with conditions such as extended involvement in the business, revenue and profit goals ("earn outs"), seller notes, and intricate deal structures. The strategies employed may clash with an owner's vision—like staff reductions, changes in compensation, and potential erosion in product quality—negatively affecting the business in the long run. Moreover, private equity typically looks to sell the business to another buyer within 3-5 years, impacting legacy, employees, and long-term stability.

Advantages of Business Brokers: Business brokers are incentivized to market your business widely, akin to real estate brokers, earning their compensation only upon successful sale. This compensation structure minimizes upfront capital risk and keeps brokers engaged throughout the process.

Disadvantages of Business Brokers: The sales process with a broker often extends over a year or more—taking 3-6 months to list and additional 8-10 months on the market. Owners invest substantial time gathering data, interviewing brokers and buyers, liaising with lawyers and bankers, yet frequently face deals falling through during financing or due diligence. This extensive effort typically incurs a fee ranging from 5% to 15% of the final sale price. It's common for owners to undergo this exhaustive process only to withdraw their business from the market in the end.