Business Owners
Three questions decide how this goes, and only one of them is about the business. By the time a buyer is at the table, most of the outcome is already fixed.
Almost every owner we meet who is thinking about selling has been thinking about it for years. Almost none of them have done anything about it.
That is not carelessness. Running a company that does $5 million to $25 million in revenue takes everything you have, and preparing to sell it is a second job with no deadline attached. There is always next quarter. And unlike a bad hire or a lost customer, the cost of waiting never shows up on a statement — it shows up once, at closing, in a number you will never be able to compare against the one you could have had.
Exit planning is not the transaction. The transaction takes six to nine months and involves bankers and lawyers. Exit planning is the two or three years before that, and in our experience it comes down to three questions.
| The question | What it really asks | Who usually owns it |
|---|---|---|
| Is the business ready for a sale? | Will a buyer's diligence find things that reduce the price or kill the deal? | You, your CPA, an investment banker |
| Am I ready for a sale? | Are you actually prepared to stop being the person who owns this company? | Nobody |
| What am I going to do next? | What the years after this look like — and what the proceeds have to produce to pay for them | Nobody |
The first question gets almost all the attention. The other two decide whether the sale was a good idea.
Having sat with owners before, during and after a sale, we would put it more bluntly than the table does. The owners who struggle are almost never the ones who were financially unprepared. They are the ones who were personally unprepared. The money tends to work out. The person is the part nobody planned for.
A serious buyer will run diligence on your company. They will pull three to five years of financials, test the quality of your earnings, interview your management team, read your contracts, and look for anything that makes the cash flow less durable than the income statement suggests.
Everything they find will be repriced. Not "discussed" — repriced, or moved into an escrow, or converted into an earn-out that pays you only if the business performs after you have stopped running it.
The counter to this is well established and rarely done: run the same diligence on yourself first, two to three years out, while there is still time to fix what it finds. In the profession this is called sell-side due diligence or a pre-sale checkup. In practice it means answering, honestly, a short list of uncomfortable questions.
None of this is wasted if you do not sell. A business that can operate without its owner, with diversified customers and clean books, is a better business to keep. That is what makes the pre-sale checkup worth doing before you have decided anything — it costs you nothing in optionality and it removes the situation every owner should fear most, which is being forced to sell on someone else's timing while unprepared.
This is the question that gets skipped, and it is the one that produces regret.
An owner in their fifties or sixties has usually spent twenty or thirty years inside a structure that supplies four things at once: income, purpose, identity and a calendar. A sale removes three of them in an afternoon and replaces the fourth with a wire transfer.
We have watched capable, clear-headed people negotiate hard for a year, sign, and then spend the following eighteen months restless and unmoored — occasionally to the point of buying another business simply to have somewhere to go. Nothing about the transaction was wrong. The planning stopped at the closing table.
Worth thinking about, deliberately, well before you are under a letter of intent:
You have been doing this for years, in most cases decades. So you had better have a life-after-sale plan — and it needs to be a real one, with the money behind it worked out, not a sentence about spending more time with the family.
That plan is what turns the previous question into something you can actually answer. It has two halves, and they are usually built by different people at different times, which is precisely why they so often fail to meet.
What the week looks like. Whether you stay on for a transition or walk. What you are going to build, chair, teach, fund or run next, and when it starts — ideally before the closing, not after it. Owners who have something waiting handle the sale differently, and they negotiate better, because they are not deciding under the quiet fear of having nothing to go to.
Owners tend to ask what the business is worth. The more useful question is what it needs to be worth to pay for the plan above.
The valuation comes from the market. Your requirement comes from your life, and it is calculated in the opposite direction — backwards from what you intend to spend, not forwards from a multiple. The arithmetic is simple enough to do on paper, and almost nobody does it before an offer arrives.
| Step | What you are working out |
|---|---|
| 1 | What your household will actually spend each year once the business is no longer paying for the car, the phone, the travel, the insurance and the meals |
| 2 | Less Social Security, rental income, a spouse's earnings, and anything else that arrives without being withdrawn |
| 3 | The remainder is what your portfolio has to produce every year, inflating, for thirty years or more |
| 4 | Less what you already hold outside the business |
| 5 | What is left is the after-tax proceeds you need — and after-tax is the operative word, because on many deals the gap between headline price and net proceeds runs to a quarter of the number |
Illustrative framework only. Your figures depend on your circumstances, your deal structure and tax law in effect at the time.
Doing this early has one specific payoff: when an offer lands, you know whether it is enough. Owners who have not done it are negotiating against a feeling, and the two failure modes are equally expensive — turning down a number that would have funded everything they wanted, or accepting one that quietly will not.
How the deal is structured then determines how much of that headline price survives. Purchase price allocation, asset versus stock sale, the Illinois replacement tax and Section 1202 stock all move the net figure materially. We cover that in detail on what you actually keep when you sell an Illinois business.
By the time a deal is live you will have assembled some version of the standard team, and each member is doing exactly their job.
| Advisor | Owns | Measured on |
|---|---|---|
| Investment banker or M&A advisor | Finding buyers, running the process, price | The deal closing |
| Transaction attorney | Documents, reps and warranties, liability | The documents |
| CPA | Quality of earnings, the return, the tax reporting | Accurate filings |
| Wealth advisor | What the proceeds have to do for the next thirty years | Often absent until after closing |
The gap is structural rather than anyone's fault. Every one of those advisors is engaged around the transaction and paid when it ends. The questions that outlast the transaction — whether the number is sufficient, how the proceeds should be invested, what changes for your taxes in the years after a single enormous income year, what it means for your estate — belong to nobody by default.
That is the seat we take. Think of it as the quarterback, or the point guard — not the specialist who executes one part, but the person reading the whole floor and making sure everyone is running the same play. We do not replace your banker, your attorney or your CPA. We work alongside them, holding the part of the picture that is about you rather than about the deal, and doing it early enough to influence structure while structure is still open.
The reason that seat has to be a fiduciary one is straightforward. Every other advisor at the table is paid because the deal happens. As a registered investment adviser, we are held to a fiduciary standard and are obligated to act in your interest — which includes telling you that an offer is not enough, or that this is the wrong year, or that you are not ready. That advice is worth very little coming from someone whose fee depends on you signing.
One more thing worth saying plainly, because it shapes how we approach this. Before Bayworth, our founder spent seven years as co-founder and executive vice president of a technology company. We have been on your side of the table, not only across it — and the questions on this page are not theoretical to us.
The most useful conversation happens before there is a deal to react to. We work with owners across Chicago and the North Shore — Wilmette, Winnetka, Kenilworth, Glenview, Northbrook and Evanston — in person, or by video anywhere.
Twelve questions, about three minutes — scored across the business, the finances and you.
Or go straight to 30 minutes with Ara Bayindiryan, no obligation.