Before You Sell Your Business, Ask Yourself These Questions

What founders should know about valuation, buyers, due diligence, leadership and life after the exit

For many founders, selling the business feels like a conversation for another day. There are customers to serve, people to hire, problems to solve and growth targets to hit. Unless an exit is already on the horizon, preparing for one can easily fall to the bottom of the list. That may be a mistake.

The decisions that make a business easier to sell are often the same decisions that make it stronger to own. Building a capable leadership team, understanding your financials, reducing dependence on the founder, strengthening customer relationships and creating systems that can survive a transition all have value whether you sell next year or never sell at all.

There is also a large shift happening. McKinsey & Company estimates that approximately six million small and midsize U.S. businesses will face ownership transitions by 2035. More than one million are considered viable candidates for sale, representing as much as $5 trillion in enterprise value.

That is a lot of founders eventually having to answer a questions they may have spent years avoiding:

What happens to this business when I am no longer the person running it?

On Say Less Unscripted, Jacquelyn Clayborn and Milton Quinn explored that question with Carmen Autry, who spent nearly 25 years building NTD Mechanical from a business started in her home into a mechanical and plumbing contractor with nearly 100 employees and approximately $30 million in annual revenue.

Carmen eventually sold the company, but getting there involved much more than finding a buyer and agreeing on a price. Her experience offers a useful look at what founders should be thinking about long before they put a business on the market.

Is Your Business Actually Ready To Be Sold?

There is a difference between owning a successful business and owning a business someone else can successfully operate.

Founders often become the center of their companies because that is what the early years require. You build the customer relationships, solve the problems, approve the spending and carry years of knowledge that nobody else has. As the company grows, people continue coming to you because you have always been the person with the answer. The danger is that something that once made the company successful can eventually make it dependent.

Consider what would happen if you were unavailable for a month. Would your leadership team have enough authority to make difficult decisions? Could major customers get what they need without calling you? Would projects continue moving? Could someone identify a financial problem and know what to do about it?

If too much stops when you stop, there is work to do.

Carmen experienced this transition as NTD Mechanical grew. She began intentionally bringing in talented people who could own areas of the business rather than trying to remain responsible for everything herself. Her philosophy eventually became what she calls the three Es: educate, empower and entrust. People needed to understand their jobs, have enough authority to perform them and be trusted to take responsibility for the outcome.

That is not simply an exit strategy. It is a leadership strategy.

Recent McKinsey research on leadership succession points in a similar direction. Although the research focuses specifically on family businesses, its findings are useful more broadly: successful transitions require organizations to develop potential successors, clarify decision-making responsibilities, build complementary leadership teams and prepare the organization well before the outgoing leader steps away.

A founder does not become less valuable by developing people who can lead without them. The company becomes more valuable because its future is no longer tied entirely to one person.

What Do You Actually Want From An Exit?

When founders talk about selling, the conversation tends to move quickly toward valuation. How much is the company worth? That matters, but another question should come first: what would make the sale successful for you?

Carmen originally thought she knew. She wanted to sell NTD Mechanical to her employees. It made sense emotionally. There were people who had helped build the company, and selling to them offered the possibility of keeping ownership close to the team.

Then her attorney started asking practical questions. How would the employees finance the purchase? Did they have the necessary capital or credit? Was Carmen prepared to effectively finance the transaction herself?

Other possibilities, including an ESOP, were explored. Eventually, Carmen had to accept that the exit she imagined was not necessarily the exit that made the most sense.

Founders should have this conversation with themselves early because price is only one part of the transaction.

You may care about preserving the company name or protecting employees. You may want to stay involved for several years, or you may want a clean break. Culture may be nonnegotiable. Maybe your priority really is maximizing the financial return.

None of those answers is inherently wrong. The mistake is waiting until there is an offer on the table to decide what matters.

Carmen had experienced an acquisition earlier in her career where repeated changes created significant disruption for employees. When it came time to sell NTD Mechanical, she knew she did not want someone to simply but the company, strip it apart and erase the culture they had built. That meant she was evaluating more than a purchase price. She was evaluating who would be responsible for the company after her.

There is an important distinction for every founder considering an exit: someone being willing to buy your company does not automatically make them the right person to own it.

Do You Really Know What Your Business Is Worth?

Founders know what their businesses have cost them to build. They remember the sacrifices, the years without enough sleep, the risks, the relationships and the moments when walking away would have been easier. None of that automatically determines what a buyer will pay.

A buyer has to evaluate the business that exists today and the value it can reasonably create tomorrow.

Carmen understood enough about that process to know she needed professional help determining NTD Mechanical’s value. During the conversation, she discussed EBITDA and the industry multiples commonly used when businesses are bought and sold. Those measure matter, but private company valuation is more nuanced than simply multiplying EBITDA by a standard number.

CFA Institute’s guidance on private company valuation explains that private businesses may be valued using income approaches such as discounted cash flow, market approach using comparable company multiples, or asset-based approaches. Private companies also present additional considerations because they lack an observable public market price and may have differences in financial reporting, ownership concentration and company-specific risk.

That is one reason founders should be cautious about deciding what their company is worth based on what another owner sold for, an industry rule of thumb or the number they personally want to receive.

A serious valuation needs to withstand someone else’s scrutiny.

Could Your Financials Survive Due Diligence?

Once a buyer becomes serious, the conversation changes. Now they want to see what is underneath the business.

Carmen described providing years of financial statements and tax returns along with licenses, insurance records, job financials and other information during NTD Mechanical’s sale process. It was extensive enough that one of her biggest recommendations to other owners is to have the right professionals helping manage it.

The important lesson is not simply to keep clean books. You should understand the story your financials are telling.

If revenue increased significantly but margins fell, can you explain why? If one customer represents a large portion of the business, what happens if that customer leaves? If expenses suddenly increased, was that a temporary event or the beginning of a trend? If the company had a difficult year, what caused it?

A potential buyer does not have your history with the business. They only have the information in front of them and the explanations you can support. That becomes particularly important when the financial history is not pretty. Carmen knows that firsthand.

What Happens When A Buyer Finds The Bad Year?

NTD Mechanical nearly went bankrupt in 2021. The company had experienced growth it was not fully prepared to manage, and the effects of COVID, supply chain disruptions and uncertainty throughout the construction industry made the situation worse. Carmen described reaching a point where she could not confidently say where the financial losses would end. At the time, the company was already for sale, but she pulled it off the market.

Carmen knew she could not ask someone to buy the company when she could not clearly explain how much it might lose or when the situation would stabilize. Instead of trying to sell around the problem, she turned her attention back to fixing the business.

When NTD Mechanical eventually returned to the market, the difficult period did not disappear from its financial history. So Carmen addressed it. She prepared a detailed explanation of the affected projects, what had gone wrong, what contributed to the losses and what the company had done to correct the problems.

There is a lesson here that extends far beyond selling a company. A difficult year does not automatically destroy the value of a business. A difficult year that leadership cannot explain creates a different problem.

Companies make bad hires. Expansions fail. Customers leave. Projects lose money. Markets change. Leaders make decisions they would not make again.

A buyer is going to see those moments. The question is whether you can demonstrate that you understand what happened, took responsibility for it and built a stronger company afterward.

Carmen did not blame everyone around her for what happened. She acknowledged that growth had gotten away from the company and that, as the leader, responsibility ultimately came back to her. That type of accountability can be more compelling than trying to present a business history where nothing ever went wrong.

Are You Choosing A Buyer Or Just Accepting An Offer?

By the time an owner reaches the point of receiving serious offers, it can be tempting to view the transaction primarily through the numbers. But the highest offer and the best buyer are not necessarily the same thing.

Think about what the buyer is actually acquiring. They are not only purchasing contracts, equipment, revenue and intellectual property. They are taking responsibility for employees, customer relationships, processes, reputation and a culture that may have taken decades to build.

For Carmen, that mattered. NTD Mechanical’s cultural expectations were remarkably simple. One of the most important was that people were nice to each other. Carmen had spent enough time in construction to know how toxic work environments could become, and she had intentionally tried to build something different. That influenced how she thought about the sale.

When the new owners eventually came to town, Carmen described feeling relieved. She believed she had chosen people who respected what the company had built and would give it and the employees an opportunity to continue succeeding.

That is why deciding what matters before entering negotiations is so important. If culture, employees, legacy or continuity are part of your definition of success, they should influence how you evaluate a buyer.

How Long Does Selling A Business Actually Take?

Founders considering an exit also need realistic expectations about time. Selling a company is rarely a quick event.

Carmen said that even when things go well, owners should expect a process that can take roughly a year. Her own journey was much longer. She spent almost five years trying to sell NTD Mechanical because circumstances changed, the company was taken off the market and the business had to become ready again before a transaction could move forward. That is another reason waiting until you are emotionally ready to leave can create problems.

If the day you decide you are done is also the day you begin preparing the company for sale, you may discover that your personal timeline and the business’ timeline are very different.

The better approach is to create options before you need them.

Have You Prepared Yourself To Leave?

This is one part of exit planning that receives far less attention than valuation, taxes or due diligence. The founder.

For Carmen, work had become deeply connected to her identity. It gave her purpose, structure and joy. As she began seriously considering a sale, she had to confront a question many high performing founders may recognize: if the company is no longer the center of my life, who am I?

A coach warned her about what he called the “hangover” that can follow selling a business. The transaction my be successful, the money may arrive and the company may be in good hands, yet the founder can still struggle with what comes next. This is where an exit strategy becomes more than a business strategy.

Owners can spend years preparing the company to live without them while doing almost nothing to prepare themselves to live without the company.

McKinsey’s succession research makes a similar point from the leadership transition perspective. Among its foundational practices is creating a clear plan for the outgoing leader’s transition, and its research discusses the importance of finding a meaningful next chapter rather than treating succession as simply handing over responsibilities.

Watch What Selling A Business Really Looks Like

Watch the full episode of Say Less Unscripted to hear Carmen Autry’s firsthand experience building, preparing and ultimately selling her business.

Then take the conversation a step further. Your business may be ready to sell, but are you ready to leave? Download the Founder’s Personal Exit Strategy, a free workbook designed to help you think through your purpose, finances, relationships, legacy and what comes next after the business.

And if you are building a company, leading people or thinking seriously about what comes next, join The Say Less Dispatch for more honest conversations, practical resources and perspectives from leaders and entrepreneurs who have actually lived the decisions they are talking about.