Listen to this post

Oliver Cone is a co-author of this post, and is a Senior Vice President at Bulkley Capital.  Bulkley is  an M&A advisory firm based in Dallas that manages tailored sales processes for privately held companies across the U.S. with values of $15 million or  more.

The reasons for selling your private company are highly individualized. You may have taken your company quite far and are now ready for your next challenge; it may now be time to retire and convert the substantial value you have created in the business into cash that you can put in the bank; or perhaps the strong relationship you once had with your business partner has run its course. Whatever the reason, once you have reached the decision to sell your business, the question is what comes next?

Most private company owners go through a sales transaction just once, but it will be the most consequential business deal of their lives. It is therefore critical for the majority owner to be ready, and this post provides guidance for those considering this path.

Preparing for the Sale

Before beginning to consider selling a private company, it is important for the business owner to understand the nature of the sales process, the timetable that is likely to be involved, and the preparation required for the ultimate result to be successful.

  • Selling a business is an elaborate process, not an event. From starting the process to closing on a sale generally takes six to eight months, including preparation, but it could be longer depending on a number of factors. This timetable may be extended if a potential buyer does not emerge promptly, if there are several suitors creating a bidding process, if due diligence becomes more extensive, or if there are issues that require more extensive negotiation, such as contracts for key employees, transition of IP rights, or dealing with special indemnity issues such as environmental concerns.
  • Nothing substitutes for comprehensive preparation. A business is not a loaf of bread, and it is more much than its financial statements. As a result, there are significant rewards to be obtained if the owner will spend the time and money to develop a compelling story that will be attractive to sophisticated buyers. This includes compiling the data that buyers will want to review, validating financial results with a quality of earnings report (QoE) and presenting the company’s potential in the best possible light.
  • Buyers are paying for the future. Following up on the previous point, in order to maximize value, the owner needs to present to potential buyers a clear path for future growth of the company and that the company has what it takes to get there. The owner knows best about what opportunities exist for the company if it had enough time and investment capital to realize them.

The Owner’s Role in the Sales Process

While it may seem logical for the owner to be front and center as the one who is driving the sales process, that is not the best approach in most instances.

  • The owner should remain in the background. If the owner appears indispensable to the ongoing business, that will be interpreted as a risk by the buyer who knows that the owner will be leaving at some point after the transaction closes. The owner will therefore want to point to current and future leaders of the business to show they are more than capable of helping the business to grow and thrive when he or she departs. Further, the owner should not wait until the transaction is on the verge of closing before handing responsibility over to key members of the management team.
  • Master the critical details. The sales process will include an exhaustive analysis of things that the owner knows intuitively, but which may be rarely tracked and documented by the business. The owner should not expect the buyer to simply take the owner’s word for these things, and they should be documented. Examples include: (i) the margin profile of the company’s products or lines of business, (ii) employee tenure and turnover rates, (iii) the nature and length of top customer relationships, and (iv) the terms of key agreements, e.g., leases, customers, and vendor contracts.
  • Engage with more than one potential buyer. Involving more than one buyer in the process is likely to enhance the perceived value of the business, and therefore, the owner is advised not to deal with just one suitor. A horse race among several viable buyers provides the owner with negotiating leverage and ultimately yields the best price.
  • Arbitrary actions can do real harm. The process should be targeted, using a rifle-shot – rather than shotgun – to locate only the most viable/attractive buyers. That is the best way to ensure confidentiality of important information, to protect key customer and vendor relationships, and to avoid fear and anxiety among the employees.

Make the Process a Team Effort

There are many different facets of the sales process, and the owner will experience great stress and likely drop some balls if he or she attempts to do this without help.

  • You need help from your team. The owner has built a viable, thriving business and there are too many questions for just one person alone to answer. The owner should bring trusted employees into the sale process and communicate clearly with them why the transaction will be good for the company and its teammembers. Putting in place financial retention mechanisms can ease employee concerns about life after the transaction.
  • Engage experienced professionals. Finally, the optimal result is more likely to be obtained when the owner retains professional M&A advisors who understand the industry, who are able to source the best potential buyers to purchase the business, and who can present the company in the most favorable light to these buyers.


Selling a business is a big deal, and it should be approached in a strategic, coordinated fashion with the understanding that it will require a tremendous amount of effort. Gathering all the necessary information will have the owner burning the candle at both ends. And navigating through unfamiliar waters when the stakes are so high produces a high level of stress. The good news is that there is a proven path to success and experienced professionals available who can help along the way. The end goal will be worth it if the sales process is handled in a manner that allows the owner to realize a substantial financial reward for years of effort and sacrifice.

*Oliver Cone is not an attorney and the views and opinions expressed in this article do not reflect those of the firm.