Frequently Asked Questions: Selling, Buying & Transitioning a Business
“What’s my business worth? How do I protect it? How long will it take? What if my numbers aren’t perfect?”
If you’re thinking “sell my business,” vetting an advisor, or navigating the M&A process for the first time, you’re not alone. These are the questions that keep business owners up at night—and the ones that determine whether you maximize your life’s work or leave value on the table.
At Lion Business Advisors, we help you understand the mechanics, the timing, and the emotional stakes of selling or acquiring a business. More importantly, we show you how to protect value, maintain confidentiality, and proceed with confidence.
Below, you’ll find answers to the questions business owners ask us most—and some you should be asking but might not know to yet. We’ve organized them by topic so you can quickly find what matters most to you right now.
1. Valuation & Pricing
Q: How much is my business worth?
We perform a rigorous business valuation rooted in market data, growth trends, peer benchmarking, and operational risk factors. Because we’re a business broker and valuation specialist in one firm, you get a defensible number you can act on—not just a guess. Our AI-powered valuation engine uses historical deal data, industry multiples, and scenario modeling to provide three valuation scenarios: conservative, market, and optimistic. This gives you clarity on pricing strategy and negotiation positioning. In practice: A $12M HVAC business owner received three valuation scenarios with AI-driven comps analysis. Result: Listed at market value, received offers 8% above target within 45 days.Q: What factors influence my business value?
Profitability, growth trajectory, recurring revenue, customer concentration, owner dependency, competitive positioning, and industry dynamics all matter. When buyers evaluate a business, they assess risk as much as upside—so we guide you toward reducing risk ahead of a sale. Key value drivers include:- Financial performance: Consistent EBITDA growth, strong margins, clean financials
- Revenue quality: Recurring contracts, diversified customer base (no single customer >15% of revenue), predictable cash flow
- Operational independence: Systems, processes, and management depth that reduce owner dependency
- Market position: Competitive moat, brand strength, growth potential, favorable industry trends
- Scalability: Documented processes, technology infrastructure, capacity for growth
Q: What increases or decreases valuation the most?
What increases value:- Recurring revenue models (contracts, subscriptions, maintenance agreements)
- Diversified customer base (top 10 customers <40% of revenue)
- Strong management team that can operate without owner
- Documented systems and processes (SOPs, training manuals, technology platforms)
- Growth trajectory (15%+ annual revenue or EBITDA growth)
- Favorable industry trends (consolidation activity, high buyer demand)
- Clean financials with clear EBITDA add-backs
- Customer concentration (one client >20% of revenue = red flag)
- Owner dependency (business can’t operate without you for 30+ days)
- Declining margins or revenue trends
- Litigation risk, regulatory issues, or compliance gaps
- Poor financial documentation or “off-books” revenue
- High employee turnover or key-person dependencies
- Outdated technology or operational inefficiencies
Q: Why does “sell my business” timing matter to value?
Value today isn’t the same as value in 12 or 24 months. Market conditions shift, multiples fluctuate, and buyer appetite evolves. Early modeling using our AI-powered valuation tools shows you how timing, performance, and preparation may raise or reduce your value. Market timing factors:- Industry cycles: Private equity interest in your sector (HVAC, plumbing, electrical saw 25% multiple increases 2023-2024)
- Interest rates: Lower rates = more buyer financing = higher valuations
- Economic conditions: Recession fears can depress multiples by 15-30%
- Your business performance: Selling after 3 consecutive growth years vs. flat/declining years = 20-40% valuation difference
Q: Does seasonality affect valuation?
Yes. Businesses with seasonal revenue patterns (landscaping, HVAC, roofing, pest control) may be valued differently depending on when the valuation occurs. We normalize financials to account for seasonality and present trailing 12-month (TTM) data to give buyers a complete picture. Best practice: Time your listing to coincide with peak performance periods or immediately after strong Q4/year-end results. Buyers are more confident when they see recent momentum. Example: A landscaping business listed in March (after winter slowdown) generated lukewarm interest. The same business listed in September (after strong summer revenue) received 40% more qualified inquiries and sold at 15% above initial asking price.Q: How does AI improve valuation accuracy?
Our AI-powered valuation engine analyzes thousands of comparable transactions, industry trends, and buyer behavior patterns to provide more accurate, defensible valuations than traditional methods. AI advantages:- Real-time market data: Live industry multiples, recent transaction comps, buyer appetite trends
- Scenario modeling: Conservative, market, and optimistic valuations based on different buyer types and deal structures
- Peer benchmarking: Compare your business to 100+ similar transactions in your industry, size, and geography
- Risk-adjusted pricing: Algorithm identifies value-eroding factors and quantifies their impact
- Predictive analytics: Forecast how operational improvements or market shifts could impact future value
2. Confidentiality & Risk
Q: How do I protect confidentiality during a sale?
Confidentiality is the cornerstone of our 7-Step Lion Selling Process. We use strict NDA protocols, redacted marketing materials, controlled disclosure, and selective buyer outreach so your key stakeholders—employees, vendors, customers—don’t know until the time is right. Our confidentiality safeguards include:- Blind teasers: Initial marketing materials reveal industry, size, and location—but not your company name or identifying details
- NDA gating: All prospective buyers sign comprehensive NDAs before receiving any detailed information
- Buyer pre-qualification: We verify financial capacity, track record, and intent before sharing sensitive data
- Secure virtual data rooms: Granular access controls, activity tracking, watermarked documents, and automatic audit trails
- Controlled disclosure: Information is released in stages based on buyer qualification and deal progression
- No public listings: We don’t post your business on public marketplaces unless you specifically request it
Q: What happens if a competitor sees my business is for sale?
That risk is real—but it’s avoidable. We plan for anonymity in every step: no signs, no public listings, no unsecured data leaks. We vet buyers, use secure data rooms, and maintain discretion to avoid value erosion or competitive intelligence gathering. If a competitor expresses interest:- We assess their intent (strategic acquisition vs. intelligence gathering)
- Require proof of funds and executive-level commitment before sharing details
- Control information flow with staged disclosure (financials first, operational details only after LOI)
- Use “clean team” protocols to separate competitive intelligence from deal evaluation
- Include non-solicitation and non-compete provisions in NDAs
Q: What information will buyers see, and what stays confidential?
Stage 1 – Initial Teaser (no NDA required):- Industry and sub-sector
- General location (city/region, not street address)
- Revenue range ($5M-$10M, not exact figures)
- EBITDA range and approximate margins
- Key value drivers (recurring revenue %, growth rate, competitive advantages)
- High-level business description
- Company name and exact location
- Detailed financial statements (3-5 years P&L, balance sheet, cash flow)
- Customer concentration data (anonymized customer list with revenue %)
- Operational details (facilities, equipment, technology, processes)
- Growth opportunities and strategic positioning
- Management team structure
- Full due diligence access (contracts, employee details, customer names, proprietary processes)
- Facility tours and management meetings
- Detailed operational and financial documentation
- Legal, tax, and compliance records
Q: How do you prevent unqualified buyers from wasting my time?
Through rigorous buyer-qualification filters: we check financial capacity, track record, culture fit, intent, and alignment. Because we combine AI buyer-matching tools with advisor judgment, you see only qualified buyers who match your criteria. Our qualification process includes:- Financial verification: Proof of funds, financing pre-approval, or investor backing documentation
- Experience assessment: Industry knowledge, operational capability, acquisition history, management expertise
- Strategic fit: Cultural alignment, growth vision, integration capability, long-term commitment
- Timeline alignment: Serious buyers with realistic closing timelines (not “just looking” or early-stage explorers)
- Decision-maker access: Direct contact with principals, not intermediaries or brokers shopping deals
Q: Should I tell my employees I’m selling?
Timing and communication matter. Premature disclosure can destabilize your team, customers, and operations—leading to employee departures, customer anxiety, and value erosion. We help you craft a communication plan that protects value and ensures continuity. Best practice timeline:- Before LOI: Tell no one except your spouse, CPA, and attorney
- After LOI, before due diligence: Inform key executives (C-suite, critical managers) on a need-to-know basis
- During due diligence: Expand communication to department heads and key employees who will interact with buyer
- After closing: Announce to full team with new owner present, emphasizing continuity, job security, and growth opportunities
- Job security and continuity of operations
- Growth opportunities under new ownership (investment, expansion, career development)
- Commitment to culture and values
- Retention bonuses or incentives (if applicable)
- Open-door policy for questions and concerns
3. Process & Timeline
Q: What is the M&A process for selling my business?
From initial readiness assessment through closing, the M&A process typically includes: discovery, valuation, preparation, marketing to qualified buyers, negotiation, due diligence, and closing. Our branded 7-Step Lion Selling Process delivers this in a structured, predictable way. The 7 steps are:- Discovery & Strategic Alignment: Define goals, timeline, confidentiality parameters, and success criteria
- AI-Enhanced Valuation & Scenario Modeling: Establish defensible value range with market data and predictive analytics
- Preparation & Packaging: Optimize financials, reduce risk factors, create compelling marketing materials
- Marketing & Buyer Targeting: Proactive outreach to 60–90 qualified buyers using AI-driven matching
- Negotiation & Offer Structuring: Maximize proceeds, optimize deal terms, coordinate with your advisors
- Due Diligence & Execution Management: Coordinate buyer review, resolve issues, maintain momentum
- Closing & Transition: Finalize legal/financial logistics, hand off to new owner, ensure smooth transition
Q: How long will it take to sell my business?
In many cases, a confidential business sale takes 7–9 months once the business is ready to market. But preparation—resolving issues, improving documentation, reducing risk—can take 12–36 months. The earlier you begin, the smoother the outcome. Typical timeline breakdown:- Preparation (1–6 months): Financial cleanup, operational optimization, marketing materials development, risk mitigation
- Marketing (2–4 months): Buyer outreach, NDA execution, initial meetings, facility tours
- Negotiation (1–2 months): Offer evaluation, LOI negotiation, deal structuring, advisor coordination
- Due Diligence (2–3 months): Buyer verification, document review, issue resolution, financing approval
- Closing (1 month): Legal documentation, final approvals, fund transfers, transition planning
- Business readiness: Clean financials and documentation = faster process
- Deal size: $1M–$5M businesses close faster than $20M+ transactions
- Buyer type: Cash buyers close in 60–90 days; SBA-financed deals take 90–120 days
- Complexity: Multi-location, real estate included, or regulatory issues add 2–4 months
Q: What if I’m not ready to sell now?
That’s exactly why we offer exit planning services. Starting early (24–36 months out) gives you time to reduce risk, increase value, and select timing instead of reacting to it. You don’t need to list now to start the planning. Early planning benefits:- Identify and fix value-eroding issues (customer concentration, owner dependency, financial gaps)
- Optimize tax structure and deal positioning with your CPA
- Build management depth and operational systems to reduce owner dependency
- Time your exit to capture market peaks and favorable industry conditions
- Reduce stress, improve outcomes, and maintain control of the process
- Increase valuation by 20–40% through strategic preparation
- Sellability Assessment™ – Gauge your current readiness and receive a customized action plan
- Personal Readiness to Exit™ – Assess your emotional and financial preparedness
- Lifestyle After Exit Score™ – Model your post-exit financial security and lifestyle
Q: What happens if the deal falls through?
Deal fallthrough happens—but it’s preventable with the right process. Using our structured approach, we reduce walk-away risk by securing strong LOIs, managing expectations, and maintaining momentum. When delays happen, we have protocols to pivot and protect value. Common reasons deals fall through (and how we prevent them):- Financing issues: We pre-qualify buyers, coordinate with lenders early, and maintain backup financing options
- Due diligence surprises: We prepare comprehensive data rooms and address red flags proactively before marketing
- Valuation disputes: Our AI-powered valuations are defensible, market-backed, and supported by comparable transaction data
- Cold feet (buyer or seller): We provide emotional support, strategic counsel, and scenario modeling to both parties
- Market shifts: We maintain backup buyer pipelines and flexible deal structures to adapt to changing conditions
- Communication breakdowns: We serve as neutral intermediary and keep all parties aligned throughout the process
Q: What can I do to help sell my business faster and for more money?
Maintain strong financial records, demonstrate growth potential, stay focused on business performance, and be flexible during negotiations. The best thing you can do is keep running your business at peak performance while we handle the sale process. Actions that accelerate sales and increase value:- Financial excellence: Clean books, clear EBITDA add-backs, documented revenue streams, consistent growth
- Operational documentation: SOPs, training manuals, org charts, technology documentation
- Reduce dependencies: Cross-train employees, delegate responsibilities, build management depth
- Customer diversification: No single customer >15% of revenue; long-term contracts where possible
- Growth story: Document expansion opportunities, market trends, competitive advantages
- Responsiveness: Quick turnaround on buyer questions, document requests, and due diligence items
- Flexibility: Open to creative deal structures (earnouts, seller financing, rollover equity)
- Making major operational changes during the sale process
- Letting performance slip (revenue, margins, customer service)
- Being inflexible on price or terms
- Slow responses to buyer inquiries or document requests
- Negotiating directly with buyers (let your advisor handle it)
4. Buyer Targeting & Screening
Q: Who might buy my business?
Potential buyers can include strategic competitors, private equity firms, owner-operators, family offices, and even key employees. We match your business with the best buyer profile based on size, industry, geography, culture, and deal structure preferences. Buyer types and their motivations:- Strategic buyers (competitors, suppliers, customers): Seek synergies, market share expansion, vertical integration—often pay highest multiples (6x–10x+ EBITDA)
- Private equity firms: Seek platform acquisitions or add-ons with strong EBITDA ($1M+) and growth potential—typically pay 5x–8x EBITDA
- Individual buyers/entrepreneurs: Seek lifestyle businesses or owner-operator opportunities—often use SBA financing, pay 3x–5x EBITDA
- Management buyouts (MBOs): Internal team purchases with seller financing or investor backing—typically pay 4x–6x EBITDA
- Family offices: Seek stable, cash-flowing businesses for long-term wealth preservation—pay 4x–7x EBITDA, prefer low-risk assets
Q: Does Lion know a buyer for my business?
Most likely! Lion Business Advisors has ongoing relationships with active buyers in most industries. However, the M&A marketplace is subject to constant change as market conditions cause buyers to become sellers and sellers to become buyers. Because we are always in the market, we know who’s buying at a premium and what deals can get financing. If we don’t already know enough good candidates, we will conduct a dedicated search to identify and qualify new prospects. Our buyer network includes:- 200+ active private equity firms and search funds
- 500+ strategic buyers (competitors, suppliers, customers) across industries
- 1,000+ individual buyers and entrepreneurs seeking owner-operator opportunities
- Regional and national consolidators in HVAC, plumbing, electrical, landscaping, and other trades
- Family offices and institutional investors seeking cash-flowing businesses
Q: How does AI improve buyer matching and deal flow?
Our system uses historical deal data, buyer behavior modeling, industry trend analysis, and private database screening to identify high-match buyers faster than traditional listing approaches. This reduces time-to-offer, increases competition, and improves the odds of a stronger outcome. AI-driven buyer targeting advantages:- Predictive matching: Algorithm identifies buyers based on past acquisition patterns, industry focus, geography, and deal size preferences
- Off-market buyer databases: Access to private equity firms, search funds, and strategic buyers not listed on public platforms
- Behavioral analysis: Track buyer activity, response rates, and closing patterns to prioritize serious prospects
- Industry trend monitoring: Real-time tracking of consolidation activity, buyer appetite, and emerging acquirers in your sector
- Automated outreach: Personalized, targeted campaigns to 60–90 qualified buyers within first 30 days
Q: Will I end up working with only one buyer?
No. We generate a buyer pool, then narrow to the best fits through screening and qualification. More competition and better match = stronger leverage and better terms. You stay in control of selecting the deal that aligns with your goals. Typical buyer funnel:- Initial outreach: 60–90 qualified buyers receive blind teaser
- NDA execution: 15–25 buyers sign NDA and receive detailed information
- Serious inquiries: 8–12 buyers conduct preliminary analysis and request meetings
- Facility tours: 4–6 buyers visit facilities and meet management
- Offers/LOIs: 2–4 buyers submit formal offers
- Final selection: You choose the best offer based on price, terms, culture fit, and closing certainty
5. Financials & Documentation
Q: What documents do buyers expect?
Buyers will want historical financial statements, tax returns, management accounts, customer data, contracts, key-person dependencies, and systems/process documentation. We help you prepare this early so you’re not scrambling when offers arrive. Standard due diligence document checklist:- Financial: 3–5 years P&L, balance sheets, cash flow statements, tax returns, EBITDA reconciliation with add-backs
- Revenue: Customer list with revenue by account, contracts, recurring revenue documentation, sales pipeline
- Operations: Org chart, employee list with salaries, vendor contracts, facility leases, equipment lists, insurance policies
- Legal/Compliance: Articles of incorporation, operating agreements, permits/licenses, litigation history, IP documentation
- Systems/Processes: SOPs, training manuals, technology stack, CRM/ERP documentation, quality control procedures
Q: What if my numbers aren’t perfect?
Many sellers worry about “imperfect” numbers—and that’s normal. What matters more is preparation, transparency, and correction of red flags before they become deal breakers. We help you clean up issues, normalize EBITDA, document add-backs, and show the story behind the numbers. Common “imperfect” scenarios we handle:- Personal expenses through business: We recast financials to show normalized EBITDA (see next question)
- Cash/off-books revenue: We help you document and legitimize revenue streams (with CPA guidance)
- Declining revenue: We position the narrative (COVID impact, strategic pivot, market shift) and show recovery trajectory
- Inconsistent record-keeping: We work with your bookkeeper/CPA to clean up and standardize financials
- High owner compensation: We adjust to market-rate salary and show true EBITDA potential
Q: What about personal expenses that the seller runs through the business?
The most commonly used metric for valuation analysis is EBITDA. In the case of a private company with significant personal expenses (country club dues, luxury vehicles, family travel) or non-recurring expenses (one-time legal fees, fire damage, lawsuit settlements), it is appropriate to calculate an adjusted EBITDA and present a recast or restated financial statement that reflects the normalized financial characteristics of the company. Common EBITDA add-backs include:- Owner compensation above market rate: If you pay yourself $300K but market rate is $150K, add back $150K
- Personal expenses: Country club dues, personal vehicles, family cell phones, personal travel, home office expenses
- Non-recurring expenses: One-time legal settlements, equipment repairs, consulting fees for sale preparation
- Discretionary expenses: Excessive entertainment, charitable donations, luxury perks
- Owner-related benefits: Health insurance for family members not involved in business, personal life insurance
6. Deal Structure & Negotiation
vvvQ: What’s the right deal structure for me?
Deal structure matters as much as price. Cash-up-front, seller financing, earnouts, rollover equity—each has pros and cons. We run structure modeling, show tax implications, and negotiate terms that align with your risk tolerance and financial goals. Common deal structures:- All-cash at closing: Highest certainty, lowest risk, immediate liquidity—but rare in small/mid-market deals
- Cash + seller financing: Most common structure; seller finances 10–30% of purchase price over 3–5 years at 5–8% interest
- Cash + earnout: Base payment at closing + additional payments tied to future performance (revenue, EBITDA, customer retention)
- Cash + rollover equity: Seller retains 10–30% ownership and participates in future growth (common with PE buyers)
- SBA-financed deals: Buyer puts down 10–20%, SBA finances 80–90%, seller may finance 5–10% (common for $1M–$5M businesses)
Q: Why is seller financing important in a sale?
Offering seller financing can expand your buyer pool, often result in a faster sale at a better price, and provide tax advantages through installment sale treatment. Benefits of seller financing:- Expands buyer pool: Many qualified buyers can’t secure 100% bank financing; seller note bridges the gap
- Increases sale price: Buyers often pay 10–15% premium when seller financing is available
- Demonstrates confidence: Shows buyers you believe in the business’s future performance
- Tax deferral: Installment sale treatment spreads capital gains over multiple years, potentially reducing tax burden
- Interest income: Earn 5–8% annual return on seller note (often higher than savings/bonds)
- Faster closing: Less reliance on bank approvals and third-party financing contingencies
- Amount: 10–30% of purchase price
- Term: 3–5 years
- Interest rate: 5–8% (prime + 2–4%)
- Security: Subordinated lien on business assets or personal guarantee from buyer
- Payment structure: Monthly or quarterly payments with balloon at end
Q: What is the difference between an asset purchase and a stock sale?
In a stock sale, the seller sells the actual corporation including all assets and liabilities—usually including cash, accounts receivable, bank debt, and all IRS/CMS liabilities. In an asset purchase, the buyer only buys certain core assets of the company, usually leaving the seller with the cash, accounts receivable, and all liabilities associated with the company. Asset Purchase (most common in small/mid-market):- Buyer advantages: Step-up in asset basis (depreciation benefits), avoids hidden liabilities, selective asset acquisition
- Seller disadvantages: Higher tax burden (ordinary income on some assets vs. capital gains), more complex transaction
- Typical structure: Buyer acquires equipment, inventory, customer lists, IP, goodwill—but not corporate entity
- Seller advantages: All proceeds taxed at capital gains rates (lower), simpler transaction, sell entire entity
- Buyer disadvantages: Inherits all liabilities (known and unknown), no step-up in asset basis, assumes corporate history
- Typical structure: Buyer acquires 100% of stock/membership interests in corporation/LLC
Q: What if I already have a buyer?
We can help you professionally structure, negotiate, and close the deal to ensure you get the best terms and avoid costly mistakes. Even when you have a willing buyer, professional representation protects your interests and maximizes value. How we add value when you already have a buyer:- Valuation verification: Ensure the offer reflects true market value (not just what the buyer is willing to pay)
- Deal structure optimization: Model tax implications, negotiate favorable terms, protect against downside risk
- Due diligence management: Coordinate document requests, resolve issues, maintain momentum
- Negotiation leverage: Professional representation signals seriousness and prevents buyer from taking advantage
- Legal/financial coordination: Work with your CPA and attorney to ensure all aspects are properly handled
- Backup buyer development: Maintain leverage by developing alternative buyers in case primary deal falls through
Q: Why should I use an M&A advisor instead of selling on my own?
Selling a business is complex, time-consuming, and emotionally charged. We protect confidentiality, maximize sale price, vet buyers, manage negotiations, and handle the process so you can focus on running your business. What professional M&A advisory provides:- Valuation expertise: AI-powered, market-backed valuations that withstand buyer scrutiny
- Confidentiality protection: Structured processes that prevent leaks and protect your business value
- Buyer network access: Reach 60–90 qualified buyers you wouldn’t find on your own
- Negotiation leverage: Professional representation prevents emotional decisions and maximizes terms
- Process management: Coordinate due diligence, legal, financial, and operational aspects
- Time savings: We handle 95% of the work while you run the business
- Risk mitigation: Avoid costly mistakes in deal structure, tax treatment, legal documentation
7. Legal, Compliance & Due Diligence
Q: What is due diligence and why does it matter?
Due diligence is the buyer’s deep review of everything you’ve represented: finances, operations, contracts, liabilities, customers, legal compliance. Most deals that collapse do so during diligence. Being prepared in advance with our readiness checklist significantly reduces the risk of derailment. What buyers verify during due diligence:- Financial verification: Reconcile reported EBITDA with tax returns, bank statements, and accounting records
- Revenue quality: Verify customer contracts, recurring revenue, payment terms, customer concentration
- Operational assessment: Review employee agreements, vendor contracts, facility leases, equipment condition
- Legal compliance: Verify permits, licenses, insurance, litigation history, regulatory compliance
- Asset verification: Physical inspection of facilities, equipment, inventory, technology systems
- Customer/vendor interviews: Validate relationships, satisfaction, contract renewability
Q: What is required during due diligence?
Due diligence is the verification of all representations made by the seller upon which an offer has been based. Due diligence is not initiated until after an offer has been accepted and a letter of intent has been executed. Sellers can expect buyers to exhaustively review all clinical, operational, and financial records. For most sellers, this process should require a few representatives of the buyer to spend a week or so at the corporate headquarters of the seller. The buyer should then immediately conduct a final analysis of all pertinent information and proceed to the negotiation of the definitive purchase agreement with the seller. What happens after due diligence: If due diligence verifies the representations of the seller, the definitive purchase agreement should reflect the price and terms agreed upon in the letter of intent. The price and terms may be renegotiated up or down after due diligence if new concerns are discovered or if the process takes so long that the performance of the company warrants a change to the originally agreed upon price and terms. Best practice: Complete preparation before marketing prevents due diligence surprises and maintains deal momentum. Our clients experience 92% LOI-to-close success rate because we address issues proactively.Q: Do you provide legal or tax advice?
No. We provide M&A advisory, brokerage, and valuation services—but not legal or tax advice. We coordinate your team of experts (CPA, attorney, financial advisor) and ensure the process integrates with their guidance. Our role vs. your advisors:- Lion Business Advisors: Valuation, buyer targeting, marketing, negotiation, deal structuring, process management
- Your CPA: Tax planning, EBITDA normalization, structure optimization, post-sale financial planning
- Your attorney: Legal documentation, contract review, liability protection, regulatory compliance
- Your financial advisor: Investment strategy, retirement planning, wealth management, estate planning
8. Costs, Fees & Engagement Terms
Q: What is Lion Business Advisors’ fee structure?
The fees and expenses of Lion Business Advisors are specific to the services required for the engagement and the size of the business. We discuss all fees up-front, prior to any process, and everything is always available in writing. Typical fee structure:- Success fee: Percentage of sale price based on modified Lehman formula (typically 5–10% depending on transaction size)
- Engagement/retainer fee: Upfront fee covering valuation, preparation, marketing materials, and initial buyer outreach (typically $7,500–$20,000)
- Due diligence coordination: Included in success fee
- Post-closing support: Included in success fee
- 10% on first $1M
- 8% on next $1M
- 6% on next $1M
- 4% on next $2M
- 2% on amounts above $5M
Q: Will I have exclusive representation?
Yes. To maintain the highest level of confidentiality and maximize results, we work exclusively with sellers during the listing period. Exclusive representation ensures:- Confidentiality protection: Single point of control prevents information leaks
- Strategic consistency: Unified messaging and positioning to all buyers
- Maximum effort: We invest full resources knowing we’re the only advisor
- Buyer confidence: Exclusive representation signals seriousness and professionalism
Q: What can a business broker do? And what can’t they do?
What we can do:- Value your business using AI-powered tools and market data
- Market it confidentially to qualified buyers
- Find and vet buyers using our extensive network
- Negotiate price, terms, and deal structure
- Assist in due diligence coordination and issue resolution
- Manage the entire M&A process from valuation to closing
- Coordinate with your CPA, attorney, and financial advisors
- Provide legal advice (you need a transactional attorney)
- Provide tax advice (you need a CPA)
- Provide financial planning advice (you need a wealth advisor)
- Guarantee a specific sale price or timeline
- Make decisions on your behalf (you remain in control)
Q: What if I change my mind about selling?
You retain control throughout the process. If the timing or circumstances change, we revisit the strategy together. Early exit planning helps you remain flexible—you don’t need to list before you’re ready. Common reasons sellers pause:- Market conditions shift unfavorably
- Personal circumstances change (health, family, business performance)
- Offers don’t meet expectations
- Emotional attachment or second thoughts
9. Post-Sale Considerations
Q: What happens after closing?
You move into your next chapter. We help coordinate transition plans, advisor hand-offs, employee/management continuity, and if relevant, communication and integration strategies. You deserve a smooth hand-off—and we help make it happen. Typical post-closing activities:- Transition period: 30–90 days of seller involvement to ensure smooth handoff (training, customer introductions, operational guidance)
- Employee communication: Formal announcement, Q&A sessions, retention bonus distribution (if applicable)
- Customer communication: Joint announcements, relationship introductions, continuity assurances
- Vendor/supplier notifications: Contract assignments, relationship transfers
- Final financial settlements: Working capital adjustments, earnout tracking, seller note documentation
Q: How are taxes and net proceeds managed?
Gross sale price is only part of the equation. Net proceeds depend on deal structure, taxes, transaction costs, debt payoff, and working capital adjustments. We coordinate modeling with your CPA so “what you take home” is as clear as “what they pay.” Factors affecting net proceeds:- Federal capital gains tax: 0%, 15%, or 20% depending on income (long-term gains)
- State taxes: Texas has no state income tax (major advantage), but other states may tax 5–13%
- Net Investment Income Tax (NIIT): Additional 3.8% for high earners
- Asset vs. stock sale: Asset sales may trigger ordinary income on some assets (equipment, inventory)
- Transaction costs: Broker fees, legal fees, accounting fees, due diligence costs (typically 7–12% of sale price)
- Debt payoff: Outstanding loans, lines of credit, equipment financing
- Working capital adjustments: Buyer may require certain cash/inventory levels at closing
- Gross sale price: $10,000,000
- Less: Debt payoff: -$1,500,000
- Less: Transaction costs (8%): -$800,000
- Less: Working capital adjustment: -$200,000
- Net proceeds before tax: $7,500,000
- Less: Capital gains tax (23.8%): -$1,785,000
- Net proceeds after tax: $5,715,000
Q: What if I’m staying on after the sale?
Some sellers stay on as consultants, earnout participants, or management partners. If that’s your plan, we help you define the role, structure the agreement, set success metrics, and ensure it protects your legacy and value. Common post-sale roles:- Transition consultant: 3–12 months, part-time, focused on knowledge transfer and relationship introductions
- Retained management: Stay on as president/GM with employment agreement, salary, and benefits
- Earnout participant: Compensation tied to future performance (revenue, EBITDA, customer retention)
- Board advisor: Strategic guidance role without day-to-day operational responsibilities
- Rollover equity partner: Retain 10–30% ownership and participate in future growth/exit
- Role clarity: Define responsibilities, authority, reporting structure, time commitment
- Compensation: Salary, bonuses, earnout structure, equity participation
- Success metrics: Clear performance targets tied to earnout or bonus payments
- Exit provisions: What happens if relationship doesn’t work out (termination, buyout, dispute resolution)
- Non-compete/non-solicit: Restrictions on future competitive activity
10. AI & Technology in M&A
Q: How is AI changing business valuations?
AI is revolutionizing business valuations by providing real-time market data, predictive analytics, and scenario modeling that traditional methods can’t match. At Lion Business Advisors, we combine AI-powered tools with human expertise to deliver more accurate, defensible valuations. AI advantages in valuation:- Real-time market intelligence: Live tracking of industry multiples, recent transactions, and buyer appetite trends
- Predictive modeling: Forecast how operational changes, market shifts, or timing decisions impact value
- Peer benchmarking: Analyze 1,000+ comparable transactions to identify value drivers and risk factors
- Scenario analysis: Model conservative, market, and optimistic valuations based on different buyer types and structures
- Risk quantification: Algorithm identifies value-eroding factors (customer concentration, owner dependency) and quantifies their impact
Q: How does AI improve buyer targeting and deal flow?
Our AI-powered buyer matching system analyzes historical deal data, buyer behavior patterns, and industry trends to identify high-probability buyers faster and more accurately than traditional methods. AI-driven buyer targeting:- Predictive matching: Algorithm identifies buyers based on past acquisition patterns, industry focus, geography, and deal size
- Off-market databases: Access to private equity firms, search funds, and strategic buyers not listed on public platforms
- Behavioral analytics: Track buyer activity, response rates, and closing patterns to prioritize serious prospects
- Industry monitoring: Real-time tracking of consolidation activity, buyer appetite, and emerging acquirers in your sector
- Automated personalization: Customized outreach campaigns to 60–90 qualified buyers within first 30 days
Q: What AI tools does Lion use in the M&A process?
We’ve integrated AI technology throughout our 7-Step Lion Selling Process to deliver faster, more accurate, and more strategic outcomes for our clients. AI tools we use:- Valuation engine: Real-time market data, comparable transaction analysis, scenario modeling
- Buyer matching platform: Predictive algorithms that identify high-probability buyers based on acquisition patterns
- Market intelligence system: Industry trend tracking, multiple monitoring, buyer appetite analysis
- Due diligence automation: Document analysis, red flag identification, issue prioritization
- Deal structure optimizer: Tax modeling, structure comparison, risk-adjusted pricing
- Secure data rooms: AI-powered access controls, activity tracking, and document management
Q: Is AI replacing human advisors in M&A?
No. AI is a powerful tool, but it can’t replace the strategic judgment, negotiation expertise, emotional intelligence, and relationship management that experienced M&A advisors provide. What AI does well:- Process large datasets quickly
- Identify patterns and trends
- Generate scenario models and forecasts
- Automate repetitive tasks (document review, buyer screening)
- Provide real-time market intelligence
- Understand emotional and personal motivations
- Navigate complex negotiations and relationship dynamics
- Provide strategic counsel tailored to your unique situation
- Build trust and confidentiality with buyers and sellers
- Resolve conflicts and manage deal-threatening issues
- Coordinate legal, tax, and financial advisors
11. Exit Planning & Readiness
Q: When should I start developing an exit strategy?
Ideally, 1–3 years before you plan to sell—but the earlier, the better. Early exit planning allows you to optimize valuation, address weak points, reduce risk, and time your exit strategically rather than reactively. Why early planning matters:- Increase valuation 20–40%: Time to reduce customer concentration, build management depth, improve financials
- Reduce deal risk: Address red flags before buyers discover them in due diligence
- Optimize tax structure: Work with CPA to minimize tax burden through strategic planning
- Time the market: Choose when to sell based on industry trends, not personal urgency
- Reduce stress: Avoid rushed decisions and maintain control of the process
- Build optionality: Create multiple exit paths (strategic sale, PE, management buyout, family succession)
Q: Is my company truly ready for sale?
Most business owners overestimate their readiness. We offer a free Sellability Assessment™ to help you determine where you stand and what adjustments could boost your valuation. Key readiness factors:- Financial performance: 3+ years of consistent or growing EBITDA, clean financials, documented add-backs
- Customer diversification: No single customer >15% of revenue, long-term contracts preferred
- Management depth: Business can operate 30+ days without owner involvement
- Documented systems: SOPs, training manuals, technology documentation, quality control procedures
- Growth trajectory: Clear path to future growth (new markets, products, services)
- Legal/compliance: All permits, licenses, insurance current; no pending litigation
- Recurring revenue: Maintenance contracts, subscriptions, repeat business models
- Sellability Assessment™ – Business readiness score and action plan
- Personal Readiness to Exit™ – Emotional and financial preparedness
- Lifestyle After Exit Score™ – Post-exit financial security modeling
Q: What are common pitfalls to avoid when selling your business?
Poor preparation, unrealistic pricing, weak confidentiality management, and lack of buyer qualification are the most common and costly mistakes. Professional guidance helps you avoid these traps. Top 10 pitfalls (and how to avoid them):- Overvaluing your business: Use professional, AI-powered valuation—not emotional attachment or “what you need”
- Poor financial documentation: Clean up books 12–24 months before listing; work with CPA to normalize EBITDA
- Weak confidentiality protocols: Use professional advisor with NDA processes and secure data rooms
- Not qualifying buyers: Vet financial capacity and intent before sharing sensitive information
- Letting performance slip: Maintain or grow revenue/EBITDA during sale process—buyers notice declines
- Being inflexible on terms: Consider seller financing, earnouts, and creative structures to maximize value
- Negotiating emotionally: Use professional advisor as buffer to prevent emotional decisions
- Inadequate due diligence prep: Prepare comprehensive data room before marketing to avoid surprises
- Ignoring tax implications: Work with CPA to model after-tax proceeds for different structures
- Going it alone: Professional M&A advisory typically increases sale price 15–30% and reduces time-to-close 30–40%
12. About Lion Business Advisors
Q: Why should I choose Lion Business Advisors to sell my business?
We deliver industry-leading success rates and guide you through every step with precision, confidentiality, and proven expertise. At Lion Business Advisors, we successfully sell over 90% of our listings—compared to the industry average of 20–30%. What sets us apart:- Proven track record: 90%+ success rate, 7–9 month average time-to-close, 92% LOI-to-close rate
- AI-enhanced capabilities: Cutting-edge valuation, buyer matching, and market intelligence tools
- Confidentiality expertise: Structured processes that protect your business value and stakeholder relationships
- Extensive buyer network: 200+ PE firms, 500+ strategic buyers, 1,000+ individual buyers across industries
- Industry specialization: Deep expertise in trades and services (HVAC, plumbing, electrical, landscaping, fabrication, distribution)
- Award-winning team: M&A Advisors of the Year 2023, Top 10 M&A Consulting Firm, #1 Business Broker in Austin
- Professional certifications: CBI (Certified Business Intermediary), CEPA (Certified Exit Planning Advisor), NACVA valuation experts
Q: Can I sell to my partners or key employees?
Yes. We can structure insider transactions in a way that preserves relationships, maximizes your value, and ensures successful transition. Management buyouts (MBOs) and partner buyouts require specialized structuring to balance fairness, financing, and continuity. How we facilitate insider transactions:- Independent valuation: Establish fair market value using AI-powered analysis and comparable transactions
- Financing coordination: Help buyers secure SBA loans, investor backing, or seller financing
- Deal structure optimization: Balance seller’s need for value with buyer’s ability to pay (earnouts, seller notes, equity rollover)
- Relationship preservation: Neutral third-party facilitation prevents emotional conflicts and maintains trust
- Legal/tax coordination: Work with attorneys and CPAs to ensure compliant, tax-efficient structure
Q: Who will be my main contact at Lion Business Advisors?
At Lion, we believe selling a business is a “Team Sport.” You will be assigned a dedicated senior advisor as your main point of contact, supported by a team of specialists in valuation, marketing, negotiation, and transaction coordination. Your dedicated team includes:- Senior M&A Advisor: Your primary contact for strategy, negotiation, and decision-making
- Valuation specialist: AI-powered valuation analysis and scenario modeling
- Marketing coordinator: Buyer outreach, materials development, campaign management
- Transaction manager: Due diligence coordination, document management, closing logistics
- Support team: Administrative support, technology management, communication coordination
Q: Where does Lion Business Advisors operate geographically?
We serve business owners across the United States, with local and regional expertise to navigate each market’s nuances. Our strongest presence is in Texas, with offices and deep market knowledge in:- Austin – Headquarters and strongest local presence
- Dallas – Strong online visibility and buyer network
- Fort Worth – DFW market expertise
- Houston – Energy corridor and industrial markets
- San Antonio & Temple – Central Texas coverage
When Should I Start the Process?
The single best move you can make is starting sooner rather than later. If you wait until “I’m ready to sell next year,” you may be entering at a disadvantage—leaving money on the table, facing unfavorable market conditions, or discovering value-eroding issues too late to fix. Why 12–36 months of preparation matters: A strategic preparation timeline lets you reduce risk, improve documentation, strengthen operations, and increase buyer interest. That leads to higher sale value, faster close, and better terms. What early planning accomplishes:- Increase valuation 20–40%: Time to reduce customer concentration, build management depth, grow recurring revenue, and optimize financials
- Reduce deal risk: Address red flags (owner dependency, compliance gaps, financial inconsistencies) before buyers discover them
- Optimize tax structure: Work with your CPA to minimize tax burden through strategic entity structuring and timing
- Time the market: Choose when to sell based on industry peaks, buyer appetite, and favorable multiples—not personal urgency
- Build optionality: Create multiple exit paths (strategic sale, private equity, management buyout, family succession)
- Reduce stress: Avoid rushed decisions, maintain control, and proceed with confidence
- A landscaping business owner began exit planning 30 months before listing. During that time, he reduced customer concentration from 45% to 28%, hired a general manager, documented all SOPs, and grew EBITDA 35%. His business sold for $18M vs. projected $11M without preparation—a $7M improvement.
- An electrical contractor waited until he was “ready to retire” to start the process. Due to owner dependency and declining margins, his business sold for 40% below initial expectations—costing him nearly $2M in lost value.
- Take the Sellability Assessment™ – Get your readiness score and customized action plan (15 minutes, instant results)
- Assess Your Personal Readiness to Exit™ – Evaluate your emotional and financial preparedness
- Model Your Lifestyle After Exit™ – Understand your post-exit financial security and lifestyle options
- Schedule a confidential consultation – Speak with a senior advisor about your goals and timeline
When Should I Start the Process?
The single best move you can make is starting sooner rather than later. If you wait until “I’m ready to sell next year,” you may be entering at a disadvantage—leaving money on the table, facing unfavorable market conditions, or discovering value-eroding issues too late to fix.
Why 12–36 months of preparation matters:
A strategic preparation timeline lets you reduce risk, improve documentation, strengthen operations, and increase buyer interest. That leads to higher sale value, faster close, and better terms.
What early planning accomplishes:
- Increase valuation 20–40%: Time to reduce customer concentration, build management depth, grow recurring revenue, and optimize financials
- Reduce deal risk: Address red flags (owner dependency, compliance gaps, financial inconsistencies) before buyers discover them
- Optimize tax structure: Work with your CPA to minimize tax burden through strategic entity structuring and timing
- Time the market: Choose when to sell based on industry peaks, buyer appetite, and favorable multiples—not personal urgency
- Build optionality: Create multiple exit paths (strategic sale, private equity, management buyout, family succession)
- Reduce stress: Avoid rushed decisions, maintain control, and proceed with confidence
Real-world impact:
- A landscaping business owner began exit planning 30 months before listing. During that time, he reduced customer concentration from 45% to 28%, hired a general manager, documented all SOPs, and grew EBITDA 35%. His business sold for $18M vs. projected $11M without preparation—a $7M improvement.
- An electrical contractor waited until he was “ready to retire” to start the process. Due to owner dependency and declining margins, his business sold for 40% below initial expectations—costing him nearly $2M in lost value.
Start your planning today:
- Take the Sellability Assessment™ – Get your readiness score and customized action plan (15 minutes, instant results)
- Assess Your Personal Readiness to Exit™ – Evaluate your emotional and financial preparedness
- Model Your Lifestyle After Exit™ – Understand your post-exit financial security and lifestyle options
- Schedule a confidential consultation – Speak with a senior advisor about your goals and timeline
You don’t need to list your business today to start planning. But the earlier you begin, the more control you have—and the better your outcome will be.
Ready to Move Forward with Confidence?
Selling or acquiring a business is complex. The process involves valuation uncertainty, confidentiality risks, buyer qualification, deal structuring, due diligence, legal documentation, tax implications, and emotional decisions. Choosing the right advisor matters more than you might think.
At Lion Business Advisors, we combine:
- Confidential business sale expertise – Structured processes that protect your value and relationships
- AI-enhanced valuation and buyer matching – Technology-driven insights that maximize outcomes
- Disciplined 7-Step Lion Selling Process – Proven methodology with 90%+ success rate
- Strategic buyer network – Access to 200+ PE firms, 500+ strategic buyers, 1,000+ individual buyers
- Human expertise and empathy – Experienced advisors who understand the mechanics and the emotions
If you’re ready to reduce uncertainty, protect your legacy, and move forward with clarity, we’re here when you’re ready for that conversation.
Next steps:
- Take the free Sellability Assessment™ – 15 minutes, instant results, customized action plan
- Request a confidential business valuation – Understand your business value with AI-powered analysis
- Schedule a consultation – Speak with a senior advisor about your goals and timeline
- Learn about our proven process – See how we guide you from valuation to closing
We’re available at your convenience to speak by phone at 800.525.3542 or we offer a complimentary in-person consultation to determine the level of service required to accomplish your goals and objectives.
Your life’s work deserves the best guidance. Let’s make sure you get it.
