The Four Worst Mistakes to Make When Selling Your Business
From ignoring potential buyers to failing to consider what you'll do once you've stopped working, here are the key mistakes to avoid when selling a business.


I have dealt with the purchase and sale of businesses firsthand and can say things never turn out exactly how you expect. If you’re reading this article, there is a good chance that you’re a business owner considering the biggest transaction of your life. There is also a good chance that things won’t play out as you’re hoping. There are too many variables that you can’t control. The purpose of this article is to help you control what you can and avoid the four big mistakes that I’ve seen over the past 15 years when advising families through major transitions.
1. Waiting too long
Waiting too long can apply to almost every facet of your business, but I’ll start with you, the business owner. In the U.S., only half of retirements are elective. The other half are a result of layoffs, disability or death. As the boss, you may not need to worry about layoffs, but if you’re worried about any of these other things, it’s time to get your ducks in a row.
On the less depressing side of the scale, imagine a scenario where things are really clicking. Revenues are growing. Margins are growing. Life is good. Why would you change things now? The people buying these businesses tend to be very smart and will pay up for a growing business. It’s the same reason we are willing to pay so much more for shares of Nvidia (NVDA) than we are for Ford (F). Additionally, part of the sale price could be an earnout where you will be paid based on growth during the earnout period.
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Lastly, do not wait too long to get your financial house in order. This includes your financials but also having a valuation done so you’re walking into things with reasonable expectations. Once a letter of intent is signed, the due diligence process begins. If your books are not clean, it could end sooner than you expect. Skeletons tend to find their way out of the closet during this period.

At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification. I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.
2. Thinking you know who 'the one' will be
When you see Boomers date after a divorce, they are understandably cautious, setting up that date only when all the stars align. When you see the Gen Z kids on Tinder, they are swiping furiously, playing a volume game. As an owner of an SME, you want to follow the lead of the Gen Z Tinder experts. Volume is king.
It’s easy to think that your top competitor is your strategic buyer. It allows them to expand into your territory, take over those relationships and find efficiencies. It’s perfect. But imagine that their owner is going through a divorce and needs liquidity, not another check to write. Meanwhile, a much smaller player just got funding from a private equity shop and is willing to pay up to establish themselves. The point is to be open to everyone, at least initially.
3. Not considering all the different types of sales
If you’ve started your research but have not gone deep on the topic, you may be evaluating only an internal or external sale. That’s a good starting point based on your end goals, but the options are plentiful within each.
For those with large employee bases, who aren’t concerned with the highest sale price, an Employee Stock Ownership Plan (ESOP) may make sense. Those with younger partners might consider a management buyout. Those who want to see the business live on under the family name have several intergenerational transfer options.
On the external side, we think in terms of financial buyers vs strategic buyers. Financial buyers are buying earnings. Strategic buyers have, you guessed it, a strategic angle. Both sales can be structured in myriad ways.
4. Not planning for life beyond the sale
It’s hard to go from being a general giving orders to a colonel taking them. The type of buyer typically dictates the transition term and specifics. If you have friends who have sold businesses, odds are that you also have friends who have had conflicts in this period.
Also, consider that you’re selling a large part of your identity. It’s an amazing thing to get so close to the finish line, but when people ask you what you do post-sale, what will you say? The problem is that “retired” is not a verb. It simply says what you don’t do. I once heard a retired professional athlete say that he never wanted to be “the guy who used to play baseball.” He strives to always be the guy who says, “This is what I’m working on now.” I urge you to follow his thinking.
If you’ve made it this far with your business, congratulations! You’ve built something salable that will change your family’s life. The next step is to see what the “wealth gap” is. This is essentially the difference between your current balance sheet and what you need to be comfortable. If your business is worth that gap, you may be close to the finish line. If not, better to find out sooner rather than later.
I will focus an entire article on how to calculate the wealth gap in five minutes. We rely on planning software to go beyond the back of the envelope, but here is a free version of what we use.
Related Content
- Preparing Your Family-Owned Business for Sale?
- For Business Owners, Estate and Exit Planning Join Forces
- Why Business Owners Should Review Their Buy-Sell Agreements
- The Three Financial Questions Every Retiree Asks (or Should)
- Will You Have a Happy Retirement (Even With Enough Money)?
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After graduating from the University of Delaware and Georgetown University, I pursued a career in financial planning. At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification. I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.
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