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Eyeing The Exit: When You're Preparing To Sell

Selling a business is like passing the baton in a relay race. The goal of entrepreneurship generally isn’t to die at your desk, but to hand off something you’ve built. Something that will continue to run, hopefully faster and better, in someone else’s hands. When done right, you’ve launched something that will outgrow you, and that’s both wonderful and terrifying.

The hard truth when it comes to selling a business is that you’re not just signing over products and profits. You’re selling potential. Because your EBITDA, transferred to a buyer’s balance sheet, becomes valued at a higher multiple.

Here are a few ideas to consider as you prepare for your exit:

1. Your Brand Is Your Story

Your brand isn’t a logo or a tagline. It’s the story of who you are, why you exist, and what you stand for. When you sell, the story must be meaningful. Buyers won’t buy into your business until they buy into your narrative. Be authentic.

2. Why Did You Do This?

Products and services are important, but buyers are fascinated with your why — the reason you started the business and the difference it makes in the world. If you can’t articulate this, you’re limiting your valuation.

3. Location Matters

Whether you’re in a major city or a small niche market, the right place provides access to resources, networks, and opportunities that increase the value of your business.

4. Invest In Your People

Your people are your greatest asset. When buyers look at your business, they want to know if your team will keep driving value after you’re sipping rum out of a coconut. Invest in your people long before you even think about selling. A strong, capable team increases your valuation.

5. Automate Your Processes

If your business runs smoothly without constant oversight, that’s a huge asset. Automation allows your business to scale without adding more personnel and overhead. Buyers want a business that can operate independently, with systems and processes that run like clockwork. You can’t scale humans as easily as you can scale processes.

6. Pobody’s Nerfect

It might surprise you to learn that buyers are excited to learn about your flaws, because these are opportunities for them to add value. Show buyers not just what works, but help them discover what can be improved. Buyers know no business is flawless, but they want to speculate about how the business can grow under new leadership. Let them do this. It pays.

7. Sweet, Sweet Multiplication

This is where it gets interesting: once your business is acquired, it instantly becomes worth more. Why? Because your profits are now moved to a larger balance sheet, of a more mature business, with a higher multiplier assigned. The value you’ve created gets amplified. This is the reason buyers are so eager to acquire smaller businesses—your profits, when integrated into a larger entity, can become significantly more valuable.

Conclusion

It’s not easy, of course, but creating something that has the power to survive without you is rewarding, and not just financially. The business will evolve in ways you could never imagine, and, honestly, it’s kind of thrilling to think that someone else will command your scrappy startup and grow it into something better.

If you’ve done the work—built a brand that people believe in, a team that can execute, and a system that runs without your constant input—then this step should feel like a natural, albeit emotional, transition. Your business becomes part of your legacy. If you do this well, it will keep growing, and you will keep growing too. Healthy things grow.

Convilo CIO Nathan Phinney will speak on Building for Acquisition: Strategies to Position Your Business for a Successful Exit March 25 at Channel Partners Conference & Expo.

Nathan Phinney