When selling a business, owners often underestimate the impact of fees and taxes. Across professional services (lawyers, accountants) and taxes, 93% of owners lose between 30% and 50% of the final sticker price, with the exact amount varying significantly by geography (e.g., California vs. the UK).
Value-based flat fees should not just reflect the initial time estimate. As a business becomes more efficient and reduces the time required for a task, the flat fee should remain the same. This allows the business, not the client, to reap the financial reward of its accumulated experience.
Heather Dubrow's $16.1M purchase sold for $16.5M but resulted in a $5M loss from an out-of-control contractor budget, insurance, and delays. This highlights hidden project costs and the importance of cutting losses by selling an unfinished property rather than continuing a failing project.
A vast majority of small-to-medium enterprises are priced at valuations their market will not support. This market failure means 8 or 9 out of 10 of these businesses never get sold, trapping their owners—often Baby Boomers—into working long past their desired retirement age.
Don't wait until you're completely exhausted to sell your company, as buyers will sense your desperation and gain the advantage. The ideal time to exit is when your passion for the market wanes or growth slows, allowing you to negotiate from a position of strength before burnout sets in.
Founder Aaron Galperin moved from high-tax California to no-tax Texas specifically to avoid state income tax on his company's sale. This pre-exit relocation is a crucial, often overlooked financial strategy that significantly increases a founder's net take-home pay from a liquidity event.
Entrepreneurs second-guess pricing because they undervalue intangible benefits like time savings, convenience, and client relationships. They also wrongly assume customers are solely price-driven, when loyalty is affected by many other factors.
Price objections don't stem from the buyer's ignorance, but from the seller's failure to establish clear economic value. Before revealing the cost, you must build a business case. If the prospect balks at the price, the fault lies with your value proposition, not their budget.
A $33M exit sounds huge, but Scott Galloway only took home $2-3M. This was because he owned just 20-30% of the company and had to split proceeds with his ex-wife. It's a powerful reminder that founder equity and personal circumstances, not the sale price, determine the actual take-home amount.
A potential buyer's first move is often to fire the least profitable clients. Proactively dropping these clients—those on legacy deals or who complain excessively—improves your gross margin, making the business more attractive and valuable before a sale even begins.
Franchise brokers often take a 60% commission on the initial fee, a fact not disclosed to the franchisee. This extracts significant capital that could be reinvested by the brand into the franchisee's success via training and support, creating a deeply misaligned system.