Your Baby is Probably Ugly

Here’s a dirty M&A secret: Most businesses that go to market never sell. Various sources estimate that 60-70% of businesses marketed for sale never close.

What does that mean for most business owners? Two big things:

1.) Talk of “market multiples” reflect a huge winner bias.

When I hear people say things like, “Companies in this industry are selling for 9x EBITDA.” I think of the JV basketball player who tells his parents not to worry about his failing grades because NBA players make millions of dollars.

2.) The winners that do sell are not owner-operated companies.

Their owners have spent years building a company that thrives without them. For most owners, the biggest obstacle to building a company that can thrive without you is emotional. The very goal is to make yourself unimportant. Who wants to feel unimportant? Unless you have some other source of purpose, this can feel like death.

The payoff of making yourself unimportant is that you gain your freedom and unlock tremendous value for you, your family, your employees, and often for the community. That allows you to explore all of the other important aspects of your life that took a back seat while you built your business.

When owners do the hard work of making themselves unimportant, often the biggest surprise they find is that they don’t have to sell their business to gain their freedom. A business that thrives without you opens the door to a greater variety of exit paths, including options that provide liquidity while preserving the company’s independence.

Our team has the privilege of an intimate view inside thousands of private companies. Among the few that have built lasting value, we see the same patterns over and over. We love sharing this insight with business owners and helping them design a path to exit on their own terms.